What is the impairment test for long-term plant assets?

Question

Quizplus · Accepted Answer

The impairment test for long-term plant assets involves comparing the book value of the asset to its expected future cash flows. If the book value is greater than the expected future cash flows, the asset is impaired and its carrying value should be written down to fair value. Therefore, option C is the correct choice. Options A and B are incorrect because they only consider the comparison between book value and fair value, but not future cash flows. Option D is incorrect because it reverses the comparison and does not address the issue of impairment.

What Is the Impairment Test for Long-Term Plant Assets