The Assets of the Aerospace Inc On December 31st, 2013, the Fair Values of the Assets

question 131

Multiple Choice

The assets of the Aerospace Inc. (a separately incorporated entity fully owned subsidiary of ABC Transport Inc.) showed the following asset carrying values on December 31st, 2013 (in millions) : $\begin{array}{|l|l|}\hline \text { Cash } & \$ 100 \\\hline \text { Accounts Receivable } & \$ 20 \\\hline \text { Inventories } & \$ 10 \\\hline \text { Property. Plant \& Equipment (net) } & \$ 200 \\\hline \text { Patents (net) } & \$ 20 \\\hline \text { Goodwill } & \$ 75 \\\hline & \\\hline \text { Total } & \$ 425 \\\hline\end{array}$
On December 31st, 2013, the fair values of the assets listed above were as follows:
$\begin{array}{|l|l|}\hline \text { Cash } & \$ 100 \\\hline \text { Accounts Receivable } & \$ 15 \\\hline \text { Inventories } & \$ 25 \\\hline \text { Property. Plant \& Equipment (net) } & \$ 120 \\\hline \text { Patents (net) } & \$ 60 \\\hline & \\\hline \text { Total } & \$ 320 \\\hline\end{array}$
Both ABC and Aerospace Inc. adhere to IFRS.

-Assume that ABC Inc. has a single asset with a historical cost of $100 and accumulated amortization of $50. The asset could be sold today for $60 less a 10% sales commission. Alternatively, ABC could use the asset to generate undiscounted operating cash flows of $40 throughout its remaining useful life and then sold for $4. Assuming that ABC adheres to ASPE, is the asset impaired?

• A) No, there is no impairment since the asset's recoverable amount exceeds its carrying value by $4.
• B) Yes, the asset is impaired by $4.
• C) Yes, the asset is impaired by $6.
• D) The answer cannot be determined, since the carrying values of the CGU's other assets and liabilities must be determined.

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Definitions:

Anxiety

A psychological state defined by emotions of concern, anxiety, or dread so intense they disrupt an individual's everyday functions.

Trembling

An involuntary shaking, quivering, or trembling of the body that can result from various factors, including emotional states, medical conditions, or cold temperatures.

Panic Disorder

A psychiatric disorder characterized by recurrent unexpected panic attacks—sudden periods of intense fear or discomfort.

Overwhelming Anxiety

An intense feeling of worry, nervousness, or unease that can severely impact day-to-day functioning.