Question
Identify the correct statement concerning the U.S. GAAP and IFRS accounting treatment for the impairment of fixed assets A. Both U.S. GAAP and IFRS require
Identify the correct statement concerning the U.S. GAAP and IFRS accounting treatment for the impairment of fixed assets
A.
Both U.S. GAAP and IFRS require companies to review assets for impairment whenever circumstances suggest that impairment is possible.
B.
U.S. GAAP requires a two-step process. The first step, the recoverability test, compares the undiscounted expected future net cash flows from the use and future disposal of the asset to its current book value. The second step, known as the fair value test, determines the magnitude of the impairment loss by comparing the book value to the fair value. Under IFRS, a single step process is used. The book value of the asset is compared to its recoverable amount. If the book value is greater than the recoverable amount, an impairment loss is recognized for the difference.
C.
Downward revaluations due to impairment occur under both U.S. GAAP and IFRS.
D.
All of the above are correct.
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