All of the Following Are True of the Recoverable Amount

question 3

Multiple Choice

All of the following are true of the recoverable amount used in the impairment test of a long-lived asset except:

• A) An asset's recoverable amount is the lower of its value-in-use and its fair value less cost to sell.
• B) An asset's recoverable amount is the higher of its fair value less cost to sell and its value-in-use.
• C) The recoverable amount is calculated as the asset's value in use less costs to sell.
• D) If an asset's recoverable amount is higher than the carrying amount, no impairment loss will be reported on the period's income statement.

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Definitions:

Assignor

An assignor is an individual or entity who transfers rights or interests in a contract or property to another party, known as the assignee.

Nonperformance

Failure to fulfill a contractual duty or obligation.

Antiassignment Clause

A provision in a contract that prohibits one party from transferring its rights and obligations under the contract to another entity without consent.

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by the party to be charged, to prevent fraud and perjury in contractual agreements.