1. Carrying amount is the amount at which an asset is recognised __________.
a. After deducting any accumulated depreciation (amortisation) b. After deducting accumulated impairment losses, if any c. Before deducting accumulated impairment losses, if any d. A and B e. A and C
2. Which of the following terms does this statement define: “the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount”? a. Depreciation b. Fair value c. Impairment loss d. Value in use
3. Which of the following statements do agree with IAS 36?
a. An entity shall assess at the end of each reporting period whether there is any indication that its assets may be impaired b. An entity shall assess at the end of each reporting period the recoverable amount of its assets c. An entity shall test its assets on impairment at the end of each reporting period d. All of the above
4. The existence of which of the following in the entity’s internal reporting does indicate that an asset may be impaired? a. Cash flows for acquiring the asset, or subsequent cash needs for operating or maintaining it, that are significantly lower than those originally budgeted b. Actual net cash flows or operating profit or loss flowing from the asset that are significantly worse than those budgeted c. A significant decline in budgeted net cash flows or operating profit, or a significant increase in budgeted loss, flowing from the asset d. A and B e. B and C
5. The ability of an intangible asset to generate sufficient future economic benefits to recover its carrying amount is usually subject to greater uncertainty before the asset is available for use than after it is available for use. a. True b. False
6. Which of the following does not indicate that an asset may be impaired? a. There are observable indications that the asset’s value has declined during the period significantly more than would be expected as a result of the passage of time or normal use b. Significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated c. The carrying amount of the net assets of the entity is more than its market capitalisation d. Market interest rates or other market rates of return on investments have decreased during the period, and those decreases are likely to affect the discount rate used in calculating an asset’s value in use and its recoverable amount
7. The existence of which of the following in the entity’s internal reporting does indicate that an asset may be impaired? a. Cash flows for acquiring the asset, or subsequent cash needs for operating or maintaining it, that are significantly lower than those originally budgeted b. Actual net cash flows or operating profit or loss flowing from the asset that are significantly worse than those budgeted c. A significant decline in budgeted net cash flows or operating profit, or a significant increase in budgeted loss, flowing from the asset d. A and B e. B and C
8. An entity does not have to make a formal estimate of an asset’s recoverable amount if market interest rates have increased during the period, provided that the asset has a long remaining useful life. a. True b. False
9. Which of the following shall be reflected in the calculation of an asset’s value in use? a. An estimate of the future cash flows the entity expects to derive from the asset b. The time value of money, represented by the current market risk-free rate of interest c. The price for bearing the uncertainty inherent in the asset d. A and B e. All of the above
10. Usually, management’s estimates of future cash flows are based on the most recent budgets/forecasts for a maximum of __________ years. a. Two b. Three c. Five d. Seven
11. Which of the following shall not be included in estimates of future cash flows? a. Projections of cash inflows from the continuing use of the asset b. Projections of cash outflows that are necessarily incurred to generate the cash inflows from continuing use of the asset and can be directly attributed, or allocated on a reasonable and consistent basis, to the asset c. Cash outflows that relate to obligations that have been recognised as liabilities d. Net cash flows, if any, to be received for the disposal of the asset at the end of its useful life
12. Estimates of future cash flows may include estimated future cash inflows or outflows that are expected to arise from a future restructuring to which an entity is not yet committed. a. True b. False
13. The estimate of net cash flows to be received for the disposal of an asset at the end of its useful life shall be the amount that an entity expects to obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, __________. a. After deducting the estimated costs of disposal b. Before deducting the estimated costs of disposal c. After adding the estimated costs of disposal d. Before adding the estimated costs of disposal
14. Which of the following factors does fair value reflect?
a. Additional value derived from the grouping of assets b. Synergies between the asset being measured and other assets c. The assumptions market participants would use when pricing the asset d. Tax benefits or tax burdens that are specific to the current owner of the asset
15. Which of the following is true with regards to the recognition of an impairment loss of an asset, which has a revaluation surplus from a previous revaluation? a. An impairment loss shall be recognised immediately in profit or loss b. An impairment loss shall be recognised as a revaluation decrease c. An impairment loss shall be recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset d. A and B e. B and C
16. Which of the following is not true with regards to the carrying amount of a cash-generating unit? a. The carrying amount of a cash-generating unit includes the carrying amount of only those assets that can be attributed directly to the cash-generating unit and will generate the future cash inflows used in determining the cash-generating unit’s value in use b. The carrying amount of a cash-generating unit does not include the carrying amount of any recognised liability, unless the recoverable amount of the cash-generating unit cannot be determined without consideration of this liability c. The fair value of a cash-generating unit shall include the fair value of any recognised liability, unless the recoverable amount of the cash-generating unit can be determined without consideration of this liability d. A and B
17. The annual impairment test for a cash-generating unit to which goodwill has been allocated may be performed at any time during an annual period, provided the test is performed at the same time every year. a. True b. False
18. In allocating an impairment loss for a cash-generating unit, an entity shall not reduce the carrying amount of an asset below the highest of: a. Its fair value less costs of disposal b. Its value in use c. Zero d. All of the above
19. The amount of the impairment loss for cash-generating unit shall be allocated pro rata on the basis of the carrying amount of each asset in the unit. a. True b. False
20. An impairment loss recognised in prior periods for an asset __________ shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. a. Other than goodwill b. Other that assets revalued in accordance with IAS 16 Property, Plant and Equipment c. Other than intangible assets with indefinite useful life d. Other that deferred tax assets
a. Remeasure the lease liability by discounting the revised lease payments using a revised discount rate b. A and B
