Are you complying?

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. IAS 36 Impairment of Assets describes the procedures that an entity should follow to ensure that it carries its assets at no more than their recoverable amount. Goodwill acquired in a business combination or intangible assets with indefinite useful lives have to be tested for impairment at least on an annual basis. What are the circumstances under which impairment of goodwill can be reversed?

  2. For the purposes of impairment testing, goodwill should be allocated to the cash-generating units (CGU) or groups of CGUs benefiting from goodwill. What is the basis for the determination of the size of the CGU for the allocation of goodwill?

  3. IAS 36 gives a list of common indicators of impairment. Which of the following is not deemed to be an indicator of impairment?

  4. Detailed disclosures, including the circumstances that have led to impairment, are required in relation to each CGU with significant amounts of goodwill and other intangible assets. Which of the following disclosures are not required under IAS36?

  5. The International Accounting Standards Board (IASB) has recently published Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36). What was the amendment introduced by this publication?

  6. The Centre for Financial Analysis and Reporting Research (CeFARR) at the Cass Business School entitled Accounting for asset impairment: a test for IFRS compliance across Europe reviewed the compliance of European listed companies' as regards IAS 36. CeFARR found that compliance with some impairment disclosure requirements varied quite considerably suggesting inconsistency in the application of IFRS. Which of the following was a key finding of the CeFARR report?

  7. As a result of the ESMA review, they have identified five problem areas in impairment reporting. Which of the following was not deemed to be a problem area?

  8. ESMA and the national regulatory authorities are focusing on certain key aspects of IAS 36. Which of the following is not a key area of concern?

  9. In the current economic and financial crisis, assets in many industries are likely to generate lower than expected cash flows with the result that their carrying amount is greater than their recoverable amount with the result that impairment losses are required. What were the findings by ESMA in their report?

  10. ESMA were concerned over the increased equity/market capitalisation ratio but relatively limited impairment losses. What was their view as regards this concern?