Final answer:
An event that indicates an asset’s book value may not be recoverable is a significant adverse change in how the asset is being used or in its physical condition, a significant adverse change in legal factors or the business climate, or a realization that the asset will be disposed of significantly before the end of its estimated useful life. The correct option is d. All of these answer choices are correct.
Step-by-step explanation:
An event that indicates an asset’s book value may not be recoverable is a. A significant adverse change in how the asset is being used or in its physical condition, b. A significant adverse change in legal factors or in the business climate, and c. A realization that the asset will be disposed of significantly before the end of its estimated useful life. These events can lead to a decrease in the value of an asset on the balance sheet, as they suggest that the asset may not generate future economic benefits as originally anticipated.
For example, if a company owns a machine that is no longer being used due to a change in the production process, or if the machine is in poor physical condition and requires extensive repairs, the book value of the machine may need to be reduced to reflect its decreased usefulness or market value. Therefore, the correct option is d. All of these answer choices are correct.