When Should a Long-Lived Asset Be Tested for Recoverability

question 26

Multiple Choice

When should a long-lived asset be tested for recoverability?

• A) When external financial statements are being prepared
• B) When the asset's fair value has decreased, and the decrease is judged to be permanent
• C) When events or changes in circumstances indicate that its carrying amount may not be recoverable
• D) When the asset's carrying amount is less than its fair value

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Definitions:

Negotiable Instruments

Written documents guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee's name written on the document.

Notice

A formal communication or declaration given by one party to another, often required by law or agreement, to inform or warn of actions taken or impending.

Holder In Due Course

A holder in due course is a person who has acquired a negotiable instrument in good faith and for value, and thus has certain rights above the original parties to the instrument.

Stolen Check

A check that has been illegally taken from its rightful owner, potentially leading to unauthorized access to the owner’s bank account or financial loss.