A Loss on Impairment of an Intangible Asset Is the Difference

question 48

Multiple Choice

A loss on impairment of an intangible asset is the difference between the asset's

• A) carrying amount and the expected future net cash flows.
• B) carrying amount and its recoverable amount.
• C) recoverable amount and the expected future net cash flows.
• D) book value and its fair value.

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Definitions:

Dividends Account

An account used in bookkeeping to track dividends declared by a company to be paid out to its shareholders.

Retained Earnings

The portion of net profits not distributed as dividends to shareholders but retained by the company for reinvestment or to pay off debt.

Sole Shareholder

An individual or entity that is the only owner of all the shares of a company, thus having complete control over its operations.

Closing Entry

Entries recorded at the conclusion of a financial period for the purpose of shifting balances from temporary to permanent accounts.