An impairment loss occurs when:
A)the recoverable amount of an asset exceeds the carrying amount
B)the carrying amount of an asset exceeds the recoverable amount
C)the asset has a zero residual value
D)the recoverable amount of an asset exceeds its initial cost.

Question

Quizplus · Accepted Answer

An impairment loss occurs when the carrying amount of an asset exceeds the recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. In other words, if the asset's current value is lower than its recorded value, then an impairment loss must be recognized to adjust the accounting records to reflect the lower value.

An Impairment Loss Occurs When