Question

Under IFRS, measurement of an impairment of a receivable is required if:

a) Cash payments have not been received for more than twelve months.
b) It is at least more likely than not that a future loss will occur, and the amount of discounted loss is measurable.
c) It is reasonably possible that prior events will give rise to a future loss that can be estimated with moderate reliability.
d) There is objective evidence that a loss event has occurred that has an impact on the future cash flows to be collected and that can be estimated reliably.

Answer 1

Under IFRS, an impairment of a receivable is required to be measured if there is objective evidence that a loss event has occurred that impacts the future cash flows to be collected, and that loss can be reliably estimated.

Step-by-step explanation:

Measurement of Impairment under IFRS

Under IFRS (International Financial Reporting Standards), an impairment of a receivable is required to be measured if there is objective evidence that a loss event has occurred that impacts the future cash flows to be collected, and that loss can be reliably estimated. In other words, option d) is correct.

For an impairment to be recognized, it is not necessary for cash payments to have not been received for more than twelve months (option a). Instead, objective evidence of a loss event is sufficient.

Additionally, the likelihood of a future loss occurring and the measurement of the discounted loss should be at least more likely than not (option b).

Lastly, it is not enough for the loss to be reasonably possible with moderate reliability; it must be reliably estimable (option c) and supported by objective evidence.