Question

Under IFRS, when is the restoration of an impairment loss on a tangible asset permitted?

a. When there is an active market for the asset.
b. When the asset's recoverable amount exceeds its carrying amount.
c. When the asset is held for sale.
d. When the asset's fair value declines.

Answer 1

The restoration of an impairment loss on a tangible asset under IFRS is permitted when the asset's recoverable amount exceeds its carrying amount.

Step-by-step explanation:

Under IFRS, the restoration of an impairment loss on a tangible asset is permitted when the asset's recoverable amount exceeds its carrying amount.

The recoverable amount is the higher of the asset's fair value less costs to sell and its value in use.

Once the impairment loss is restored, the asset's carrying amount is increased, but it is limited to the carrying amount that would have been determined had no impairment loss been recognized in prior years.