Podcast
Questions and Answers
What is the objective of lessors' disclosures?
What is the objective of lessors' disclosures?
- To provide information for users to assess the effect of leases on the lessor's financial position, financial performance, and cash flows (correct)
- To provide a detailed breakdown of the lease payments received by the lessor
- To disclose the specific terms of each lease agreement
- To provide information for users to assess the effect of leases on the lessee's financial position, financial performance, and cash flows
What are some external indications of asset impairment?
What are some external indications of asset impairment?
- Changes in market interest rates (correct)
- Plans to discontinue or restructure
- Goodwill acquired in a business combination
- Obsolescence
What is the objective of lessors' disclosures in financial statements?
What is the objective of lessors' disclosures in financial statements?
- To provide information about the lessor's financial position
- To assess the effect of leases on the lessor's financial position, performance, and cash flows (correct)
- To disclose information about the lessee's financial position
- To provide information about the lessor's leasing activities
What must lessors disclose for finance leases?
What must lessors disclose for finance leases?
When must intangible assets with indefinite useful lives be tested for impairment?
When must intangible assets with indefinite useful lives be tested for impairment?
What is the disclosure requirement for finance leases?
What is the disclosure requirement for finance leases?
How can Covid-19 impact indications of impairment?
How can Covid-19 impact indications of impairment?
Which disclosure requirement should be applied for operating leases?
Which disclosure requirement should be applied for operating leases?
What disclosure requirements must lessors follow for operating leases?
What disclosure requirements must lessors follow for operating leases?
Study Notes
- Entities must assess whether there are indications of asset impairment at each reporting date.
- The entity must estimate the recoverable amount (RA) of the asset if there is an indication of impairment.
- Testing for impairment can be time-consuming.
- Intangible assets with indefinite useful lives must be tested for impairment annually.
- Goodwill acquired in a business combination must be tested for impairment annually.
- External indications of impairment include significant declines in asset value, adverse changes in the technological, market, economic, or legal environment, and changes in market interest rates.
- Internal indications of impairment include obsolescence, physical damage, idle assets, plans to discontinue or restructure, and worse than expected economic performance.
- Covid-19 may impact the indications of impairment.
- Testing for impairment requires consideration of multiple factors.
- Impairment testing is important for accurate financial reporting.
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Description
Are you familiar with the process of asset impairment testing? This quiz will test your knowledge on the key concepts related to impairment testing, including indications of impairment, annual testing requirements, external and internal factors, and the potential impact of Covid-19. Test your understanding and learn more about why impairment testing is crucial for accurate financial reporting.
