The carrying amount of a financial 'held-to-maturity' asset,subject to an impairment loss:
A) can be reduced through an allowance account.
B) can be reduced through a provision account.
C) must be reduced through an allowance account.
D) must be reduced directly.

Question

Quizplus · Accepted Answer

According to the accounting standards, impairment losses on held-to-maturity assets should be recognized in the income statement and the asset's carrying amount should be reduced through an allowance account. This allowance account is used to reflect the portion of the asset's carrying amount that is no longer expected to be recovered.

The Carrying Amount of a Financial 'Held-To-Maturity' Asset,subject to an Impairment