Question

Testing for possible impairment of a long-lived asset (asset group) that an entity expects to hold and use is required

a. At each interim and annual balance sheet date.
b. At annual balance sheet dates only.
c. Periodically.
d. Whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Answer 1

d. Whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Step-by-step explanation:

It is advisable that an entity conducts impairment testing on an annual basis especially when the business is using International Financing Reporting Standards for preparing its financial statements.

However, under the US GAAP, impairment testing is only should only be undertaken when circumstances or events pointing to the fact the asset carrying value is not likely to be recovered, which is applicable in this case since we are dealing with US scenario where US GAAP applies