In allocating an impairment loss,an entity shall not reduce the carrying amount of an asset below the highest of:
A)value in use and zero.
B)present value and zero.
C)cost and market value.
D)initial cost and replacement cost.

Question

Quizplus · Accepted Answer

According to IAS 36, the carrying amount of an asset should not be reduced below its value in use or zero, whichever is higher. This means that if an asset has no value in use or is expected to generate no future cash flows, its carrying amount should be reduced to zero. Therefore, option A is the correct answer. Options B, C, and D are incorrect because they are not consistent with the requirements of IAS 36.

In Allocating an Impairment Loss,an Entity Shall Not Reduce the Carrying