A loss on impairment of an intangible asset is the difference between the asset's
A) carrying amount and the expected future net cash flows.
B) carrying amount and its fair value.
C) fair value and the expected future net cash flows.
D) book value and its fair value.

Question

Quizplus · Accepted Answer

The loss on impairment of an intangible asset is recognized when the carrying amount of the asset exceeds its fair value. The impairment loss is the difference between the carrying amount and the fair value. Expected future cash flows are used to determine the fair value, but they are not directly subtracted from the carrying amount to calculate the impairment loss. Therefore, choice (A) is incorrect. Book value and carrying amount are the same, so choice (D) is also incorrect.

A Loss on Impairment of an Intangible Asset Is the Difference