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I am really confused here…some questions I encountered seems contradicting with each other
I have looked through many post on this. Here is what I got of a general rule:
1. Official Document: According to ASC 360-10-35-20 under U.S. GAAP, because an asset is considered to have a new cost basis after an impairment loss is recorded, the reversal (or “restoration”) of a previously recognized impairment loss is prohibited. <https://www.iasplus.com/en-us/standards/ifrs-usgaap/impairment-of-assets
2. Willey: Losses on fixed assets to be disposed of can be recovered due to changes in the fair value or selling costs associated with the asset.
Recoveries of previously recognized impairment losses may not be recognized in subsequent periods.
https://www.another71.com/cpa-exam-forum/topic/loss-on-asset-impairment-question/While the questions I met:
1. Ninja: Restorations of carrying value for long-lived assets are permitted if an asset’s fair value increases subsequent to recording an impairment loss for which of the following?A.
Both held for use and held for disposalB.
Held for useC. Correct
Held for disposalD.
Neither held for use nor held for disposal2. Willey
<Recognition of loss upon impairment> <Restoration of previously recognized impairment losses>
Yes Yes
Yes No correct
No Yes
No NoThe only reason I can think of for Willy’s concepts is that some time the loss is not recognized as impairment but as a valuation allowance to OCI. In this sense loss can be reversed when for disposal but impairment can’t. If this is true, my biggest concern is that in the exam, when I saw question 1 what should I choose since it clearly states that it is impairment.
Thanks guys!
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