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D104 - LESSON 13 – IMPAIRMENTS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024 $15.49   Add to cart

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D104 - LESSON 13 – IMPAIRMENTS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

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D104 - LESSON 13 – IMPAIRMENTS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

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  • August 20, 2024
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  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • WGU D104
  • WGU D104
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D104 - LESSON 13 – IMPAIRMENTS
QUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
When to test for impairment? - ANSWER At least yearly, but whenever factors indicate a potential
impairment

potential circumstances for impairment - ANSWER decrease in asset's market value, change in manner
the asset is used, adverse change in legal factors or in the business climate, accumulation of costs in
excess of the original asset acquisition/construction cost, financial projection/forecast demonstrates
continued losses associated with the asset

impairment - ANSWER there is a loss of utility in the asset and need to write down because of the
conservatism and matching principles.

means the asset's value is permanently gone and cannot be recovered.

Not extraordinary, recorded under Other Expenses and Losses

How to determine if an asset should be impaired? - ANSWER Via the recoverability test.

Determine if future net cash flows are recoverable by comparing the carrying amount of the asset to
future net cash flows.

If future net cash flows > carrying amount, NO IMPAIRMENT.

Else, proceed to step 2, Calculate the impairment loss

How to calculate impairment loss? - ANSWER impairment loss = amount of carrying value over its fair
value

if asset is held and in use:
Impairment loss = (carrying value - fair value)
no reversal of loss

if asset is for sale:
impairment loss = (carrying value - fair value) - cost to sell
no depreciation, but reversal of loss OK

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