Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its fair value minus costs to sell. The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale. The present value of the future cash flows expected to be derived from an asset. The amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, minus the costs of disposal.

Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its fair value minus costs to sell. The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale. The present value of the future cash flows expected to be derived from an asset. The amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, minus the costs of disposal.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

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The primary measurement basis is a.) The current market price if the asset currently held was sold on the open market. b.)The current market price if the asset held was purchased on the open market. c.) The present value of the cash flows that the asset is expected to generate. d.) The market price at the date the asset was acquired.
Fair value as a method of asset measurement is defined as: Multiple Choice O O the cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime. price that would be received to sell assets in an orderly transaction between market participants on a given date. the net amount of cash into which an asset could be converted in the ordinary course of business. the value of what is given in exchange for the asset at its initial acquisition.
The best evidence of fair value for an investment property is price in a binding sale agreement fair value determined on the basis of observable data current price in an active market. management’s estimate of future cash flows multiplied by a discount rate
Which one of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal? Fair value Residual value Realizable value Value in use
1. Inventory should be stated at (a) Lower of cost and fair value. (b) Lower of cost and net realizable value. (c) Lower of cost and nominal value. (d) Lower of cost and net selling price. 2. Which of the following costs of conversion cannot be included in cost of inventory? (a) Cost of direct labor. (b) Factory rent and utilities. (c) Salaries of sales staff (sales department shares the building with factory supervisor). (d) Factory overheads based on normal capacity. 3. Inventories are assets (a) Used in the production or supply of goods and services for administrative purposes. (b) Held for sale in the ordinary course of business. (c) Held for long-term capital appreciation. (d) In the process of production for such sale. (e) In the form of materials or supplies to be consumed in the production process or the rendering of services. (f) Choices b and d. (g) Choices b, d, and e. 4. The cost of inventory should not include (a) Purchase price. (b) Import duties and other taxes. (c)…
which of the following statements in relation to the cost of the asset is true? A. all of the statements are true B. The cost includes cash equivalent paid C. The cost includes the fair value of any non monetary consideration given to acquire an asset D. The cost includes nonrefundable purchase taxes
1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…
As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is: higher. lower. the same.
Value-in-use is 14 O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. 21 O c. The higher of amasset's fair value less cost to sell and its market value. 28 O d. The market value.
Under the impairment of assets, value-in-use is * a. The undiscounted present value of future cash flows arising from the continuing use of the asset and from its disposal. b. The discounted present value of future cash flows arising from the continuing use of the asset and from its disposal. c. The higher of an asset's fair value less cost to sell and its market value d. The amount at which the asset is recognized in the statement of financial position
Which of the following statements is true for historical cost valuations? (Select one or more) a. Present value of cash flows using historical interest rates is an item in which cash receipts or cash payments will occur over time, these future cash flows are then discounted at the interest rate in effect at the time of the initial transaction. Balance sheet examples include notes receivable and notes payable. b. Acquisition cost is the amount paid initially to acquire the asset, examples include prepayments, land, and intangibles with indefinite lives. c. Acquisition cost is the amount paid initially to acquire the asset, examples include amounts invested in research and development for intellectual property. d. Adjusted acquisition cost is the amount paid initially to acquire an asset less accumulated depreciation and amortization, examples include equipment and intangible assets with limited lives.
In determining the value in use, which of the following cash flow is excluded from the computation? I. Income tax receipts or payments. II. Net cash flows received or paid on the disposal of the asset at the end of its useful life in an arm's length transaction which is after using the asset. III. Future costs of improving or enhancing the asset's performance.

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		The higher of an asset’s value in use or its fair value minus costs to sell.
		The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale.
		The present value of the future cash flows expected to be derived from an asset.
		The amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, minus the costs of disposal.