CFA Practice Question

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CFA Practice Question

Under IFRS, recoverability is based on the comparison between ______ and ______.

I. carrying value
II. fair value
III. undiscounted future cash flows
IV. discounted future cash flows
Correct Answer: I and the higher of II and IV

III is used under U.S. GAAP.

User Contributed Comments 7

User Comment
joywind I thought that fair value should be more concisely expressed as fair value less cost of disposal
johntan1979 Yes, joywind, I agree with you. The more precise answer would be (fair value - cost to sell) but I suppose II is right since you DO need fair value as part of the equation.
quanttrader sucks we need to know both GAAP and IFRS - wouldn't just one do?
schweitzdm Right though. As a chartered analyst we should be aware of how companies in other countries are doing things though. Especially if you are looking globally for value companies in today's market.
Tom0409 Agree CFA Institute should remove GAAP, it doesn't make sense, why allow LIFO?
ashish100 Because 'Merica thats why. *picture the bald eagle in your head coz this wont allow images
kingirm Perfect summary
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