Jo Jo Chong, Inc. needs to determine if its property, plant, and equipment has been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are): $\begin{array}{cc}
& \text {Recoverability Test} &\text { Fair Value Test }\\end{array}$
A)$\begin{array}{cc} &&& \text {Yes }&&&&&&\text { Yes} \\end{array}$
B)$\begin{array}{cc} &&& \text {Yes} &&&&&&& \text {No} \\end{array}$
C)$\begin{array}{cc} &&&\text { No} &&&&&&&\text { Yes} \\end{array}$
D)$\begin{array}{cc} &&&\text { No} &&&&&&& \text {No} \\end{array}$

Question

Jo Jo Chong, Inc. needs to determine if its property, plant, and equipment has been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are): $\begin{array}{cc} 
& \text {Recoverability Test} &\text { Fair Value Test }\\end{array}$
A)$\begin{array}{cc} &&& \text {Yes }&&&&&&\text { Yes} \\end{array}$
B)$\begin{array}{cc}  &&& \text {Yes} &&&&&&& \text {No} \\end{array}$
C)$\begin{array}{cc} &&&\text { No} &&&&&&&\text { Yes} \\end{array}$
D)$\begin{array}{cc}  &&&\text { No} &&&&&&& \text {No} \\end{array}$

Quizplus · Accepted Answer

The correct impairment tests for property, plant, and equipment typically involve both the Recoverability Test and the Fair Value Test. The Recoverability Test checks if the future undiscounted cash flows expected from the use of the asset and its eventual disposition are less than its carrying amount. If this test indicates impairment, the Fair Value Test is then used to measure the amount of impairment loss by comparing the asset's fair value to its carrying amount.

Jo Jo Chong, Inc Recoverability Test Fair Value Test \begin{array}{cc} & \text {Recoverability Test} &\text { Fair Value Test }\\\end{array}​Recoverability Test​ Fair Value Test ​

Jo Jo Chong, Inc $\begin{array}{cc} & \text {Recoverability Test} &\text { Fair Value Test }\\\end{array}$