Asked by Nellies Asante on Jun 06, 2024
Verified
Which of the following is used to measure the amount of the write-down that must be recognized on an impaired asset?
A) Undiscounted total future cash inflows minus future outflows.
B) Undiscounted future cash inflows minus the current carrying amount of the asset.
C) Fair value of the asset minus the current carrying amount of the asset.
D) Discounted total future cash inflows minus future outflows.
Write-down
An accounting procedure reducing the book value of an asset when its market value drops below the recorded cost, resulting in a non-cash expense.
Impaired Asset
An asset that has a market value less than its carrying value on the balance sheet, indicating that it may not generate future benefits worth its listed value.
- Determine the scenarios under which long-lived assets are evaluated as impaired.
Verified Answer
KF
Karina FernandezJun 08, 2024
Final Answer :
C
Explanation :
The amount of the write-down on an impaired asset is measured as the difference between the asset's fair value and its current carrying amount. This approach reflects the loss in value that the asset has incurred.
Learning Objectives
- Determine the scenarios under which long-lived assets are evaluated as impaired.
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