If a residual value is determined to be of a material amount the entity is required to review the residual value:

Question

Quizplus · Accepted Answer

The entity is required to review the residual value at the end of each reporting period if it is determined to be of a material amount. This ensures that the carrying amount of the asset is not materially overstated or understated in the financial statements. Monthly reviews (Choice A) may be too frequent and unnecessary, while reviewing only when completing interim reports (Choice C) may not be timely enough to reflect any changes in the residual value. Answer D is incorrect as the entity is required to review the residual value if it is of a material amount.

If a Residual Value Is Determined to Be of a Material