Which of the following statements concerning asset valuation is incorrect?
A) Subject to a few exceptions, non-current assets, after acquisition, can be measured at either cost or fair value.
B) If non-current assets are measured using the cost basis, they cannot be valued at less than their recoverable amount.
C) If non-current assets are measured using the fair value basis, fair value must be regularly reassessed.
D) Assets and liabilities are recorded initially at their historical cost.

Question

Quizplus · Accepted Answer

The statement in B is incorrect because when non-current assets are measured using the cost basis, they can indeed be valued at less than their recoverable amount if impairment losses have occurred. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized, reducing the carrying amount to the recoverable amount.

Which of the Following Statements Concerning Asset Valuation Is Incorrect