Final answer:
Under U.S. GAAP, restoration of impairment losses is not permitted, whereas IFRS does allow for reversals of impairment losses for certain assets if circumstances change.
Step-by-step explanation:
The question relates to whether the restoration of impairment losses is permitted under U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS). Under U.S. GAAP, once an asset has been written down due to impairment, the loss is considered permanent, and the written-down value becomes the new cost basis. Therefore, the restoration of impairment losses is not permitted.
In contrast, IFRS allows the reversal of impairment losses for certain types of non-financial assets when there has been a change in the estimates used to determine the asset's recoverable amount. This reversal is limited to the amount of the original impairment loss, and it cannot exceed the carrying amount that would have been determined had no impairment loss been recognized.
Restoration of impairment losses is not permitted under U.S. GAAP (Generally Accepted Accounting Principles) but is allowed under IFRS (International Financial Reporting Standards).
Under U.S. GAAP, once an impairment loss is recognized, it cannot be reversed in subsequent periods even if the condition that caused the impairment improves. This is known as the 'ceiling' concept.
On the other hand, IFRS allows for the reversal of impairment losses if the recoverable amount of the asset exceeds its carrying amount. However, the reversal is limited to the amount that was previously recognized as the impairment loss.