An Impairment Loss Can Be Reversed When

question 20

Multiple Choice

An impairment loss can be reversed when:

• A) there is no indication that the impairment loss no longer exists or has been reduced and there has not been a change in the estimates used to determine the assets recoverable amount.
• B) with the exception of goodwill, all intangible assets carrying values exceed their fair market values.
• C) the intangible assets carrying values exceed their undiscounted future cash flows.
• D) with the exception of goodwill, the recoverable amount is determined and compared to the carrying amount. If the recoverable amount is greater than the carrying amount then the impairment loss previously recorded is reversed.

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Definitions:

Inventories

Items held for sale in the ordinary course of business, as well as materials and components intended for use in the production process.

GAAP

A universally recognized set of rules and standards for financial reporting, applied within a specific legal territory, known as Generally Accepted Accounting Principles.

Income Statement

A financial report that provides a summary of a company's revenues, expenses, and profits/losses over a specific period of time.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, before deducting overheads, salaries, taxes, and interest payments.