If impairment indicators suggest that property, plant and equipment might be impaired, the firm then performs a ________.
A) one-step impairment test
B) two-step impairment test
C) three-step impairment test
D) four-step impairment test

Question

Quizplus · Accepted Answer

A two-step impairment test is performed for property, plant, and equipment when impairment indicators are present. The first step is to determine if the asset's carrying amount exceeds the sum of the undiscounted cash flows expected from its use and disposal. If it does, the second step is to measure the impairment loss by comparing the asset's carrying amount to its fair value.

If Impairment Indicators Suggest That Property, Plant and Equipment Might