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CHAPTER 42
SMEs – IMPAIRMENT OF ASSETS
1. Which of the following statements best describes the term “impairment loss”?
a. The present value of estimated future cash flows expected to arise from the continuing use of an asset and
from the ultimate disposal.
Mindanao State University
College of Business Administration and Accountancy
DEPARTMENT OF ACCOUNTANCY
Marawi City
b. The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly
disposal.
c. The amount which an entity expects to obtain for an asset at the end of the useful life.
d. The amount at which an asset could be exchanged between knowledgeable and willing parties in arm’s
length transaction.
8. The estimates of future cash flows in calculating value in use include al;l of the following, except
9. What is the allocation of an impairment loss recognized for a cash generating unit?
10. It is the smallest identifiable group of asserts that generate cash inflows from continuing use that are largely
independent of the cash inflows form other assets or group of assets.
ANSWER 42-14
1. B 6. A
2. C 7. B
3. B 8. D
4. A 9. D
5. A 10. A