Rebound Inc

question 159

Multiple Choice

Rebound Inc. reports under IFRS. In 2018 Rebound recognized an impairment of $200,000 due to a troubled debt restructuring. In 2019 Rebound was pleased to determine that more cash flows would be received from the receivable than was previously thought, such that, if the total impairment were to be calculated in 2019, it would be estimated as $150,000 rather than $200,000. How should Rebound treat this in its 2019 income statement?

• A) Rebound should ignore the change, given that recovery of its previous impairments is not allowed under IFRS.
• B) Rebound should make a prior period adjustment of 2018 income, given that the impairment charge was in error.
• C) Rebound should recognize an increase in 2019 net income of $50,000.
• D) None of these answer choices are correct.

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Definitions:

Ethical Decisions

Choices made based on moral principles and values, aimed at doing the right thing in a given situation.

Code of Ethics

A set of principles and guidelines designed to help professionals conduct their business with integrity and honesty.

Problem

A matter or situation regarded as unwelcome, harmful, or needing to be dealt with.

Dilemma

A situation in which a difficult choice has to be made between two or more alternatives, especially equally undesirable ones.