Which of the following events provide objective evidence that a financial asset has been impaired:
I. A default in interest payments.
II. The borrower enters into bankruptcy.
III. The downgrade of an entity's credit rating.
IV. Significant financial difficulty of the issuer.
A) I, II and IV only.
B) II, III and IV only.
C) I, III and IV only.
D) II and IV only.

Question

Quizplus · Accepted Answer

Events such as a default in interest payments (I), the borrower entering into bankruptcy (II), and significant financial difficulty of the issuer (IV) are considered objective evidence of financial asset impairment. A downgrade of an entity's credit rating (III) might indicate potential risk, but on its own, it does not necessarily provide objective evidence of impairment.

Which of the Following Events Provide Objective Evidence That a Financial