How Does the Definition of Asset Impairment Differ Between IAS

question 21

Multiple Choice

How does the definition of asset impairment differ between IAS 36 and U.S. GAAP?

• A) U.S. GAAP does not consider selling price in determining impairment, but IAS 36 does.
• B) U.S. GAAP considers cash flows in assessing value of continued use, but does not discount them, whereas IAS 36 requires discounting in assessing asset impairment.
• C) Asset impairment is more likely to occur under IAS 36 than under U.S. GAAP.
• D) All of the above are differences between IAS 36 and U.S. GAAP.

---

Definitions:

Cost Of Debt

The current interest rate a business is charged on its outstanding debts, encompassing both loans and bonds.

Dividend Growth Model

A method for valuing a stock by assuming dividends grow at a constant rate in perpetuity.

Cost Of Equity

The return that investors expect for providing capital to a company, often seen as the risk-free rate plus a premium for the equity risk.

Growth Rate

The percentage change in the value of a specific metric (e.g., revenue, population) over a designated period.