CFA Practice Question

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CFA Practice Question

The amount of the loss required to be recognized for an impairment in the value of a long-lived asset should be the excess of the asset's carrying value over the ______.

A. undiscounted estimated future cash flows
B. acquisition cost
C. fair value
D. acquisition cost less the estimated future cash flows
Correct Answer: C

When the fair value is available, the loss on impairment is the difference between the carrying value and the fair value.

User Contributed Comments 5

User Comment
mrushdi if fair value not available, then discount value of cash flows.
Renaud1807 discounted value of CF!!
Vibis tricky
johntan1979 Answer A is used in recoverability test to determine impairment, not to calculate the loss.
quanttrader fair value if known, otherwise discounted cash flows
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