IFRS and U

question 12

Multiple Choice

IFRS and U.S. GAAP differ with regard to accounting for impairment on property, plant and equipment in all of the following ways except

• A) U.S. GAAP requires the recoverability test to determine whether impairment has occurred but IFRS does not.
• B) Under IFRS, impairment testing is performed at each reporting date. Under U.S. GAAP impairment testing is done only when management has reason to believe that the asset may be impaired.
• C) IFRS but not U.S. GAAP, allows for recovery of impairment in assets held for use.
• D) U.S. GAAP requires assets held for sale or disposal to be reported at the lower-of-cost or net realizable value. IFRS requires that these assets be reported at the higher of fair value less cost to sell and value-in-use.

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Definitions:

Federal Trade Commission

A U.S. federal agency tasked with protecting consumers and ensuring a strong competitive market by preventing anticompetitive, deceptive, and unfair business practices.

Friendly Merger

A merger transaction agreed upon and conducted in a cooperative manner by all involved parties, typically with shared strategic goals.

Friendly Consolidation

A type of corporate merger or acquisition that is agreed upon and pursued with the cooperation of both the target and acquiring companies.

Agreement in Principle

A preliminary agreement outlining the basic terms and conditions under which an investment will be made, pending further negotiations and due diligence.