Problem 29-1

1. It is a fall in the market value of an asset so that its recoverable amount is now less than its
carrying amount in the statement of financial position.
a. Impairment
b. Depreciation
c. Amortization
d. Decline in value
2. What is the recoverable amount of an asset?
a. Fair value less cost of disposal
b. Value in use
c. Fair value less cost of disposal or value in use, whichever is higher
d. Fair value less cost of disposal or value in use, whichever is lower
3. Fair value is
I.
The price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date
II.
The present value of future cash flows expected to be derived from an asset
a. I only
b. II only
c. Both I and II
d. Neither I nor II
4. What is the best evidence of fair value?
a. Quoted price in an active market for identical asset
b. Quoted price in an active market for a similar asset
c. Quoted price in an inactive market for identical asset
d. Unobservable input price for the asset
5. An active market is
I.
The market in which transactions for the asset or liability take place with sufficient
regularity and volume to provide pricing information on an ongoing basis
II.
The market with the greatest volume and level of activity for the asset or liability
a. I only
b. II only
c. Both I and II
d. Neither I nor II
6. Costs of disposal include all of the following, except
a. Legal cost
b. Stamp and similar transaction tax
c. Cost of removing the asset
d. Finance cost
7. Value in use of an asset is equal to the
a. Undiscounted future net cash flows from the use of the asset
b. Undiscounted future net cash flows from the use and eventual disposition of the asset
c. Discounted future net cash flows from the use of the asset
d. Discounted future net cash flows from the use and eventual disposition of the
asset

8. The estimates of future cash flows in calculating value in use include all of the following,
except
a. Cash inflows from the continuing use of the asset
b. Cash outflows incurred to generate the cash inflows from the continuing use of the
asset
c. Net cash flows from the disposal of the asset at the end of its useful life
d. Future costs of improving or enhancing the assets performance
9. Estimates of future cash flows normally would cover projections over a maximum of
a. Five years
b. Ten years
c. Fifteen years
d. Twenty years
10.It is the smallest identifiable group of assets that generate cash inflows from continuing use
that are largely independent of the cash inflows from other assets or group of assets.
a. Cash generating unit
b. Goodwill
c. Corporate asset
d. The entity as a whole