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:

Bankruptcy

The legal process through which individuals or businesses unable to pay their debts can seek relief from some or all of their liabilities.

Equity

The ownership interest of shareholders in a corporation, represented by their shares.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the corporation's profits.

Equity

Refers to the ownership interest held by shareholders in a corporation, measured by the portion of the company's capital that they own outright without any debts.