According to AASB 136 Impairment of Assets,the recoverable amount test requires an entity to compare the fair value an asset less costs to sell,with:
A)the amount obtainable from the sale of the asset
B)the costs directly attributable to the liquidation of the asset
C)its disposal value
D)its value in use.

Question

Quizplus · Accepted Answer

The recoverable amount test requires an entity to compare the fair value of an asset less costs to sell, with its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Therefore, option D is the correct answer. Option A is incorrect because it only considers the amount obtainable from the sale of the asset, while option B only considers the costs of liquidation. Option C is also incorrect because it is not a defined term in AASB 136.

According to AASB 136 Impairment of Assets,the Recoverable Amount Test