Question : 141. U.S. GAAP and IFRS distinguish three categories of long-lived assets : 1245652

141. U.S. GAAP and IFRS distinguish three categories of long-lived assets for purposes of measuring and recognizing impairment losses. The second category addresses intangibles, other than goodwill, not subject to amortization.  This category does not include: 
A. brand names.
B. trademarks.
C. franchise rights.
D. renewable licenses.
E. none of the above

142. Under U.S. GAAP and IFRS reporting standards, management assesses the firm’s assets for impairment at each reporting date by determining if impairment indicators are present. Impairment indicators include 
A. the decline in the market value of an asset significantly beyond what would be expected because of use or the passage of time.
B. significant adverse changes in the entity’s technological environment.
C. significant adverse changes in the entity’s economic environment.
D. significant adverse changes in the entity’s legal environment.
E. all of the above

143. Under U.S. GAAP and IFRS reporting standards, management assesses the firm’s assets for impairment at each reporting date by determining if impairment indicators are present. Impairment indicators do not include 
A. the decline in the market value of an asset significantly beyond what would be expected because of use or the passage of time.
B. significant adverse changes in the entity’s technological environment.
C. significant adverse changes in the entity’s economic environment.
D. significant adverse changes in the entity’s legal environment.
E. significant adverse changes in the entity’s Chief Executive Officer’s health.

144. U.S. GAAP provisions require a three-step procedure for measuring and recording impairments for long-lived assets other than nonamortized intangibles and goodwill. An asset impairment loss arises when the carrying values of the assets  
A. exceed the sum of the discounted cash flows.
B. exceed the sum of the undiscounted cash flows.
C. exceed the replacement cost.
D. exceed the fair market value less cost to sell.
E. exceed the fair market value.

145. Applying IFRS, the test for an impairment loss for long-lived assets other than nonamortized intangibles and goodwill compares the balance sheet carrying value with the asset’s  
A. recoverable amount.
B. sum of the undiscounted cash flows.
C. sum of the discounted cash flows.
D. expected future value.
E. fair market value.

146. Macon Company

Macon Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Macon Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping center has caused Macon Company to reassess the future rentals. Macon Company expects the building to provide rentals for only 15 more years before Macon will sell it. Macon Company uses a discount rate of 8% per year in discounting expected rentals from the building.

Macon now expects to receive annual rentals of $2.7 million per year for 15 years and to sell the building for $10.0 million after 15 years; these payments, in total, have a present value of $26.2 million when discounted at 8% per year. The building’s fair value is $25 million today. Costs to sell are estimated at $1,000,000.

Using the Macon Company data, under U.S. GAAP: 
A. no impairment loss has occurred.
B. an impairment loss has occurred in the amount of $3.8 million.
C. an impairment loss has occurred in the amount of $6 million.
D. an impairment gain has occurred in the amount of $6 million.
E. an impairment gain has occurred in the amount of $3.8 million.

147. Macon Company

Macon Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Macon Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping center has caused Macon Company to reassess the future rentals. Macon Company expects the building to provide rentals for only 15 more years before Macon will sell it. Macon Company uses a discount rate of 8% per year in discounting expected rentals from the building.

Macon now expects to receive annual rentals of $2.7 million per year for 15 years and to sell the building for $10.0 million after 15 years; these payments, in total, have a present value of $26.2 million when discounted at 8% per year. The building’s fair value is $25 million today. Costs to sell are estimated at $1,000,000.

Using the Macon Company data, the application of IFRS indicates: 
A. no impairment loss has occurred.
B. an impairment loss has occurred in the amount of $3.8 million.
C. an impairment loss has occurred in the amount of $6 million.
D. an impairment gain has occurred in the amount of $6 million.
E. an impairment gain has occurred in the amount of $3.8 million.

148. Wheaton Company

Wheaton Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Wheaton Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping center has caused Wheaton Company to reassess the future rentals. Wheaton Company expects the building to provide rentals for only 15 more years before Wheaton will sell it. Wheaton Company uses a discount rate of 8% per year in discounting expected rentals from the building.

Wheaton now expects to receive annual rentals of $1,200,000 per year for 15 years and to sell the building for $6.0 million after 15 years; these payments, in total, have a present value of $12.2 million when discounted at 8% per year. The building’s fair value is $11.0 million today and costs to sell are $600,000.

Under U.S. GAAP, Wheaton recognizes  
A. no  impairment loss.
B. an impairment loss of $17.8 million.
C. an impairment loss of $19.0 million.
D. an impairment loss of $18.7 million.
E. an impairment loss of $30.0 million.

149. Wheaton Company

Wheaton Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Wheaton Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping center has caused Wheaton Company to reassess the future rentals. Wheaton Company expects the building to provide rentals for only 15 more years before Wheaton will sell it. Wheaton Company uses a discount rate of 8% per year in discounting expected rentals from the building.

Wheaton now expects to receive annual rentals of $1,200,000 per year for 15 years and to sell the building for $6.0 million after 15 years; these payments, in total, have a present value of $12.2 million when discounted at 8% per year. The building’s fair value is $11.0 million today and costs to sell are $600,000.

Under U.S. GAAP, Wheaton would record the following entry 
A. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .   11,000,000
Apartment Building (New Valuation) . . . . . . . . . . . . . . . . . . . .10,000,000
Loss on Impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19,000,000
   Apartment Building (Acquisition Cost) . . . . . . . . . . . . . . . . . . . . . . . . .   40,000,000 
B. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .   10,000,000
Apartment Building (New Valuation) . . . . . . . . . . . . . . . . . . . .10,000,000
Loss on Impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20,000,000
   Apartment Building (Acquisition Cost) . . . . . . . . . . . . . . . . . . . . . . . . .   40,000,000 
C. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .  10,000,000
Apartment Building (New Valuation) . . . . . . . . . . . . . . . . . . . 11,000,000
Loss on Impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19,000,000
   Apartment Building (Acquisition Cost) . . . . . . . . . . . . . . . . . . . . . . . . .   40,000,000 
D. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .  10,000,000
Apartment Building (New Valuation) . . . . . . . . . . . . . . . . . . . 12,000,000
Loss on Impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18,000,000
   Apartment Building (Acquisition Cost) . . . . . . . . . . . . . . . . . . . . . . . . .   40,000,000
E. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .  10,000,000
Apartment Building (New Valuation) . . . . . . . . . . . . . . . . . . . 12,200,000
Loss on Impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17,800,000
   Apartment Building (Acquisition Cost) . . . . . . . . . . . . . . . . . . . . . . . . .   40,000,000

150. Wheaton Company

Wheaton Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Wheaton Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping center has caused Wheaton Company to reassess the future rentals. Wheaton Company expects the building to provide rentals for only 15 more years before Wheaton will sell it. Wheaton Company uses a discount rate of 8% per year in discounting expected rentals from the building.

Wheaton now expects to receive annual rentals of $1,200,000 per year for 15 years and to sell the building for $6.0 million after 15 years; these payments, in total, have a present value of $12.2 million when discounted at 8% per year. The building’s fair value is $11.0 million today and costs to sell are $600,000.

Under IFRS, Wheaton recognizes  
A. no  impairment loss.
B. an impairment loss of $17.8 million.
C. an impairment loss of $19.0 million.
D. an impairment loss of $18.7 million.
E. an impairment loss of $30.0 million.