Asked by IBRAKHIM KATCHIEV on Jul 07, 2024
Verified
When an asset is measured using the cost model, an impairment loss is:
A) set off against the balance of revenue.
B) recognised directly in equity.
C) accumulated in a separate 'accumulated impairment losses' account.
D) included in the balance of the accumulated depreciation and impairment losses account for that asset.
Cost Model
An accounting method that values an asset based on its historical cost less any accumulated depreciation or impairment losses.
Impairment Loss
A charge recognized when the carrying amount of an asset exceeds its recoverable amount, reflecting a permanent reduction in the asset's value.
Accumulated Depreciation
The total depreciation that has been recorded against an asset over its useful life, representing the reduction in value of the asset.
- Differentiate between the cost model and the revaluation model in the context of handling impairment losses.
Verified Answer
Learning Objectives
- Differentiate between the cost model and the revaluation model in the context of handling impairment losses.
Related questions
Reversals of Impairment Losses on Held-To-Maturity and Available-For-Sale Securities Are ...
When Assessing the Recoverable Amount of Assets That Have Previously ...
Impairment Loss Is the Amount by Which the Carrying Value ...
Impairment Losses on Goodwill Are Never Reversed
In Relation to the Reversal of an Impairment Loss of ...