An impairment loss will be recognised in the group accounts when non-current assets are sold at a loss on an intragroup basis when value in use is:
A) greater than carrying amount.
B) less than carrying amount.
C) greater than sale price.
D) less than sale price.

Question

Quizplus · Accepted Answer

An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, which is either the asset's fair value less costs of disposal or its value in use. Value in use is the present value of expected future cash flows from the asset, and if this amount is less than the carrying amount, an impairment loss must be recognized. Selling assets at a loss on an intragroup basis is not a basis for recognizing an impairment loss, as it does not reflect the asset's recoverable amount.

An Impairment Loss Will Be Recognised in the Group Accounts