If an assets 'value in use' exceeds its market value then:
A) An entity should adjust the current carrying amount of the asset to book value.
B) It would be expected that the entity would dispose of the asset immediately.
C) An impairment loss will need to be recorded.
D) It would be expected that the entity would retain the asset.
E) No entry is required as cost is the only way to reliably value an asset.

Question

Quizplus · Accepted Answer

If an asset's value in use exceeds its market value, it would be expected that the entity would retain the asset because it is generating more value for the company than it could obtain by selling it in the market. No adjustment to book value, impairment loss, or disposal is necessary. Cost is not the only way to reliably value an asset, as value in use takes into account future cash flows generated by the asset.

If an Assets 'Value in Use' Exceeds Its Market Value