Reference no: EM133002426

Problem 1: Which is incorrect concerning the reversal of an impairment loss?

a) The reversal of the impairment loss shall be recognized immediately as an adjustment of the opening balance of retained earnings.

b) The carrying amount of the asset shall be increased to its new recoverable amount.

c) The increased carrying amount of the asset due to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognized in the prior years.

d) Any reversal of an impairment loss on a revalued asset shall be treated as a revaluation increase.

Problem 2: When should a long-lived asset be tested for recoverability?

a) When the asset's fair value has decreased and the decrease is judged to be permanent.

b) When external financial statements are being prepared.

c) When events indicate that carrying amount may not be recoverable.

d) When the asset's carrying amount is less than fair value.

Problem 3: Value in use of an asset is equal to the?

a) Undiscounted future net cash flows from the use of the asset.

b) Undiscounted future net cash flows from the use and eventual disposition of the asset.

c) Discounted future net cash flows from the use of the asset.

d) Discounted future net cash flows from the use and eventual disposition of the asset.

Problem 4: The following are external indicators of impairment, except:

a) Market value declines.

b) Negative changes in technology, markets, economy, or laws.

c) Increases in market interest rates.

d) Worse economic performance than expected.