TRUE OR FALSE

1. With the cost recovery impairment model, the fair value and carrying value are compared to determine the amount of impairment
2. Depreciation of an asset should commence when the asset is available for use.
3. The diminishing balance method of depreciation results in more depreciation in the early years of an assets life and less depreciation in later years.
4. The units of production method of depreciation will result in variable depreciation expense year-over-year, depending on production
5. When management makes a decision to sell a noncurrent asset rather than continue its use in operations, it should be reclassified as a liability that is held for sale.
6. The recoverable amount is the higher of the value in use and the fair value less costs of disposal.
7. A company purchases an asset on January 1, Y3. The asset cost $40,000 and has a useful life of 5 years. The balance of accumulated depreciation at December 31, Y5 would be $24,000.