If impairment indicators suggest that an asset 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

If impairment indicators suggest that an asset might be impaired, the firm would typically perform a two-step impairment test, which includes estimating the asset's recoverable amount and comparing it to its carrying amount. If the carrying amount exceeds the recoverable amount, then an impairment loss is recognized. The other options (A, C, D) do not accurately reflect the standard impairment testing process.

If Impairment Indicators Suggest That an Asset Might Be Impaired,the