• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Impairment of assets bpp question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Impairment of assets bpp question

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • July 15, 2021 at 2:37 pm #627853
    Andreas412
    Member
    • Topics: 5
    • Replies: 3
    • ☆

    Dear Tutor iam mixed up in the answer in the bpp question in the exam kit.
    The question is Select whether each of the following statements is an indicator of impairment or is not an indicator.

    a. Advances in the technological enviroment in which an asset is employed has an adverse impact on its future use.

    b. An increase in interest rates which increases the discount rate of an entity uses.

    c. The carrying amount of an entitys net assets is lower thatn the entitys number of shares in issue multiplied by its share price.

    d. The estimated net realisable value of inventory has been reduced due to fire damage although this value is greater than its carrying amounnt.

    The asnwer says a, b and c are indicators and d is not.

    The bpp workbook however states that an indicator of impairment is :

    Carrying amount of net assets of the entity excceds market capitalisation

    Which one is true ? Thank you

    July 17, 2021 at 8:24 pm #628091
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6450
    • ☆☆☆☆☆

    Hi,

    The answer given is correct and you are confusing what is said in the workbook with this scenario as it is not relevant in this instance.

    For part d then there is no indicator of impairment if the NRV of the inventory is still above its carrying amount. It is effectively saying that we used to have a NRV of $20 per unit and this is not $16 per unit but the carrying amount of the inventory is $12, so no indicator of impairment.

    The scenario that you are trying to link back to is in relation to a company that is listed on an exchange and its market capitalisation (based on the current share price) is below the value of the net assets in the financial statements. The low share price therefore gives an indicator of a potential impairment.

    Thanks

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • CHICCO.J on ACCA AB Chapter 1 – The nature and structure of organisations – Questions
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy