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PAS 36 Impairment of Assets

QUIZ:
1. According to PAS 36, an asset is impaired if
a. its carrying amount exceeds its recoverable amount.
b. its recoverable amount exceeds its carrying amount.
c. its carrying amount is less than its value in use.
d. its fair value less disposal costs exceeds its recoverable amount.

2. According to PAS 36, when measuring an asset’s value in use, the discount rate to be used in
discounting the estimated cash flows should be the
a. pre-tax rate that reflects current assessments of the time value of money and risks.
b. post-tax rate that reflects current assessments of the time value of money and risks.
c. pre-tax rate that reflects current assessments of market-based risks for similar replacement
assets.
d. post-tax rate that reflects current assessments of market-based risks for similar replacement
assets.

3. According to PAS 36, if an asset’s fair value less disposal costs cannot be determined, its
recoverable amount would be its
a. carrying amount.
b. replacement cost.
c. value in use.
d. current cost.

4. According to PAS 36, if it is not possible to determine the recoverable amount of an individual
asset,
a. that asset is not impaired.
b. the carrying amount of that asset should be written-off in its entirety, unless a rough-
estimation can be made.
c. the recoverable amount of that asset should be determined in relation to the cash-generating
unit to which it belongs.
d. that asset is useless; it should be given away to the garbage collection guy.

5. The reversal of an impairment loss results to

a. a gain and an adjustment to the depreciation charges in subsequent periods.
b. a gain, but no adjustment to the depreciation charges in subsequent periods.
c. a loss and an adjustment to the depreciation charges in subsequent periods.
d. a loss, but no adjustment to the depreciation charges in subsequent periods.

“To those who by persistence in doing good seek glory, honor and immortality, he will give eternal
life.” (Romans 2:7)

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