In 2017, Yumster Company determined that a production machine used in its operations was impaired and an impairment loss of $110,000 was recognized. In 2017, the fair value of the asset increased by $170,000 due to an unexpected resurgence in demand for the products the machine was designed to produce. How would the gain due to increase in fair value be recognized in 2017?
A) U.S. GAAP permits the recognition of this impairment reversal as income from continuing operations.
B) U.S. GAAP permits the recognition of this impairment reversal as other comprehensive income.
C) U.S. GAAP allows the recognition of this impairment reversal as either income from continuing operations or as other comprehensive income, depending upon management's intent.
D) U.S. GAAP does not permit recognition of gains on reversal of previous impairment loss write-downs.

Question

Quizplus · Accepted Answer

Under U.S. GAAP, once an impairment loss is recognized, it cannot be reversed, even if the fair value of the asset subsequently increases.

In 2017, Yumster Company Determined That a Production Machine Used