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Long-Term Operating Assets: Departures From Historical Cost
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Intermediate Accounting Study Set 7

Business

Quiz 12 :
Long-Term Operating Assets: Departures From Historical Cost

Quiz 12 :
Long-Term Operating Assets: Departures From Historical Cost

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An impairment occurs when a long-term operating asset's carrying value falls below its total future cash-generating ability.
Free
True False
Answer:

Answer:

False

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When an impairment occurs, the firm recognizes a loss on the income statement.
Free
True False
Answer:

Answer:

True

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The method of accounting for the impairment of long-term assets depends upon the type of loss that occurs.
Free
True False
Answer:

Answer:

False

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When a long-term operating asset is impaired, the firm will determine a new carrying amount based upon its expectation of future economic benefits.
True False
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Impairment of a long-term operating asset occurs when ________.
Multiple Choice
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When a long-term operating asset is impaired, the firm reduces the asset's carrying value on the balance sheet and recognizes the decline in value ________.
Multiple Choice
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All of the following are key steps related to accounting for impairments of long-term operating assets except ________.
Multiple Choice
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List the four key steps related to accounting for impairments of long-term operating assets.
Essay
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When testing property, plant, equipment, and finite-life intangible assets for impairment, a firm must assess them as individual assets.
True False
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When assessing property, plant and equipment for impairment in asset groups, the firm groups assets at the lowest level of identifiable and independent cash flows.
True False
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Firms conduct an impairment test whenever impairment indicators indicate that property, plant and equipment or finite-life intangibles may be impaired.
True False
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One example of an impairment indicator for property, plant and equipment is a significant increase in the market price of an asset or asset group.
True False
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One example of an impairment indicator for property, plant and equipment is a significant adverse change in legal factors that affect the value of an asset or asset group.
True False
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The first step of the impairment test for property, plant and equipment is assessing asset recoverability.
True False
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When assessing the impairment of property, plant and equipment, fair value is also referred to as replacement cost.
True False
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After recognizing the impairment of property, plant and equipment, the firm carries the asset at its fair value less previously accumulated depreciation.
True False
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U.S. GAAP allows for subsequent reversals of write-downs for long-term operating assets held for use in operations.
True False
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The impairment loss for property, plant and equipment equals carrying value less fair value.
True False
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Firms assess property, plant and equipment for impairment ________.
Multiple Choice
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Before testing property, plant, and equipment (PPE) and finite-life intangible (FLI) assets, ________.
Multiple Choice
Answer:
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