alleryStart learning →Why does a rise in interest rates signal impairment?
ALower depreciable amount of the asset
BHigher discount rate cuts recoverable amount
CHigher residual value of the asset
DHigher net selling price of the asset
Answer & Solution
Correct answer: B. Higher discount rate cuts recoverable amount
Higher market rates are likely to raise the discount rate used for value in use, which can cut recoverable amount materially.
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Related questions
An enterprise applying AS 17 discloses impairment losses by:A revalued asset's market value basis and negligible disposal costs mean the asset is:For a small and medium-sized company, value in use may be measured by:Impairment of deferred tax assets is dealt with under:Disclosing key assumptions is:If recoverable amount is value in use, a material loss disclosure includes:A class of assets under AS 28 means a grouping of assets of:AS 28 disclosures of impairment losses are required for each: