If an asset's 'value in use' exceeds its market value then:
A) An entity should adjust the current carrying amount of the asset to book value.
B) It would be expected that the entity would dispose of the asset immediately.
C) An impairment loss will need to be recorded.
D) It would be expected that the entity would retain the asset.

Question

Quizplus · Accepted Answer

If an asset's value in use exceeds its market value, it indicates that the entity can generate greater value by retaining the asset rather than selling it. Hence, it would be expected that the entity would retain the asset. An entity should consider impairment testing to assess the asset's recoverable amount and determine if there is any impairment loss. However, there is no immediate need to adjust the current carrying amount of the asset to book value or dispose of the asset. Therefore, options A, B, and C are incorrect.

If an Asset's 'Value in Use' Exceeds Its Market Value