Question

Susqua, Inc. has held-to-maturity debt securities it purchased in 20X1. At December 31, 20X2, Susqua, Inc. reported a $120,000 impairment loss related to these securities. During 20X3, the debtor was successful in registering a new patent which improved the debtor’s operating outlook. This change of events resulted in a reversal of $45,000 of the impairment loss. At December 31, 20X3, the fair value of the debt securities had increased by $68,000 over the impaired value previously recorded. Susqua, Inc. uses IFRS for its external reporting. How much, if any, of this reversal can Susqua, Inc. report in its income for 20X3? Multiple Choice $ - 0 - $68,000. $45,000. $120,000.

Answer 1

The amount that Susqua, Inc. can report in its income for 20X3 is $45,000.

Amount that can be reported

According to IFRS (International Financial Reporting Standards), under the "IAS 39 Financial Instruments: Recognition and Measurement" standard, the reversal of an impairment loss for held-to-maturity debt securities is limited to the amount of the original impairment loss.

In this case, the impairment loss related to the debt securities was $120,000. The reversal of the impairment loss was $45,000, which is less than the original impairment loss.

Therefore, the amount that Susqua, Inc. can report in its income for 20X3 is $45,000.

The correct answer is: $45,000.