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WorksheetsIAS 36 - IMPAIRMENT OF ASSETS - GROUP 3
Total questions: 14
Worksheet time: 2hrs 20mins
Question 1. Which of the following assets is not covered by the impairment regulation of IAS 36?
A. Intangible assets
B. Property, plant and equipment
C. Goodwill
D. Inventory
Question 2. Which of the following is NOT an indicator of impairment?
A. Advances in the technological environment in which an asset is employed have an adverse impact on its future use
B. An increase in interest rates which increases the discount rate an entity uses
C. The carrying amount of an entity’s net assets is higher than the entity’s number of shares in issue multiplied by its share price
D. The estimated net realizable value of inventory has been reduced due to fire damage although this value is greater than its carrying amount
Question 3. Which of the following asset is tested for impairment annually
A. Inventory
B. Goodwill
C. Deferred tax asset
D. Property, plant, equipment
Question 4. Currently, the recognition and recording of long-term assets in the financial statements of Vietnamese enterprises is done according to which principle?
A. Accrual principle.
B. Going concern principle
C. Historical cost.
D. Matching principle.
Question 5. How to recognize an asset if salvage value < book value?
A. Recording loss due to impairment asset
B. Recording profit due to impairment asset
C. No impairment of assets
Question 6. If the fair value less costs to sell cannot be determined then:
A. The recoverable amount is the value in use
B. The carrying value of the asset is used
C. The replacement cost is used
D. The asset is not impaired
Question 7. When deciding upon the discount rate to be used, which factors should not be taken into account?
A. Risks specific to the asset which future cash flow estimates have not been adjusted
B. Corporate lending rates
C. Risks which relate to the asset for which future cash flow estimates have been adjusted
D. Cost of capital
Question 8. If an entity has cash-generating units of different size , each containing goodwill, it is necessary that each unit must be tested for goodwill:
A. at the same time
B. annually at balance date
C. and the smaller unit must be tested before the larger unit
D. only if it is reasonable to expect than goodwill has been impaired
Question 9. How many steps to allocate an impairment loss?
A. 1
B. 2
C. 3
Question 10. Choose the wrong sentence. IAS 36 standard does not apply to:
A. Agricultural-related biological assets
B. The right to exploit production and non-renewable resources.
C. Limited assets held for sale
D. Land, Building, Machinery
Question 11 . If an entity does not expect to recover the carrying amount of an asset, the entity has incurred:
A. a depreciation expense
B. an amortization cost
C. an impairment loss
D. a loss on disposal
Question 12 . A company purchased a building on 1 April 20X1 for $100,000. The asset had a useful life at that date of 40 years. On 1 April 20X3 the company revalued the building to its fair value of $120,000. Calculate the revaluation gain and prepare the journal entry to account for the revaluation.
A. Dr Buildings – cost 20/ Dr Buildings – accumulated depreciation 5/ Cr Revaluation surplus 25
B. Dr Buildings – cost: 5/ Dr Buildings – accumulated depreciation: 20/ Cr Revaluation surplus: 25
C. Dr Revaluation surplus: 25/ Cr Buildings – cost: 20/ Cr Buildings – accumulated depreciation: 5
D. Dr Revaluation surplus: 25/ Cr Buildings – cost: 5/ Cr Buildings – accumulated depreciation: 20
Question 13 . The carrying amount of Zen Co’s property at the end of the year amounted to $108,000 (cost/value $125,000 and accumulated depreciation $17,000). On this date the property was revalued and was deemed to have a fair value of $95,000. The balance on the revaluation surplus relating to a previous revaluation gain for this property was $10,000. Calculate loss on revaluation & prepare the journal entry to account for the revaluation.
A. Dr Revaluation surplus: 10 / Dr Statement of profit or loss: 3 / Dr Accumulated depreciation: 17 / Cr Property – Cost: 30
B. Dr Revaluation surplus: 3 / Dr Statement of profit or loss: 3 / Dr Accumulated depreciation: 17 / Cr Property – Cost: 30
C. Dr Revaluation surplus: 13/ Dr Accumulated depreciation: 17 / Cr Property – Cost: 30
Question 14 :What is the purpose of disclosing revaluation surplus to a business?
A. Increasing confidence in financial statements
B. Increasing the proportion of private capital
C. Ability to borrow
D. All are correct
