M5 - PP&E: Depreciation, Disposal, & Impairment

Question 1

Declining balance depreciation formula

Answer 1

2 x (1/N) x (cost - accumulated depreciation)

Question 2

How is the restoration of a previously recognized impairment loss reported?

Answer 2

Complement of income under continuing operations before income taxes, reduce carrying value to fair value
Prohibited under U.S. GAAP unless held for disposal

Question 3

When a building is held for sale it is valued at

Answer 3

Lower of book value or net realizable value

Question 4

Where is the gain on the sale of a building reported in the IS?

Answer 4

Part of continuing operations

Question 5

How are land restoration costs accounted for?

Answer 5

Added to the depletion base (not depreciated)

Question 6

When should a long held asset be tested for recoverability?

Answer 6

When events or changes in circumstances indicate that it’s carrying amount may not be recoverable