1.

IAS 36 applies to which of the following

assets?
(a) Inventories.
(b) Financial assets.
(c) Assets held for sale.
(d) Property, plant, and equipment.
Answer: (d)
2. Value-in-use is
(a) The market value.
(b) The discounted present value of future
cash
flows arising from use of the asset and from
its disposal.
(c) The higher of an assets fair value less
cost
to sell and its market value.
(d) The amount at which the asset is
recognized
in the balance sheet.
Answer: (b)
3. If the fair value less costs to sell cannot
be determined
(a) The asset is not impaired.
(b) The recoverable amount is the value-inuse.
(c) The net realizable value is used.
(d) The carrying value of the asset remains
the
same.
Answer: (b)
4. If assets are to be disposed of
(a) The recoverable amount is the fair value
less
costs to sell.
(b) The recoverable amount is the value-inuse.
(c) The asset is not impaired.
(d) The recoverable amount is the carrying
value.
Answer: (a)
5. Estimates of future cash flows normally
would
cover projections over a maximum of
(a) Five years.
(b) Ten years.
(c) Fifteen years.
(d) Twenty years.
Answer: (a)
6. An entity has a database that it
purchased five
years ago. At that date, the database had
15,000 customer
addresses on it. Since the date of purchase,
1,000 addresses have been taken from the
list and
2,000 addresses have been added to the list.
It is anticipated

that in two years time, a further 4,000

addresses
will have been added to the list. In
determining the value-in-use of the
customer lists,
how many addresses should be taken into
account at
the current date?
(a) 15,000
(b) 16,000
(c) 20,000
(d) 21,000
Answer: (b)
7. Which of the following is the best
evidence of an
assets fair value less costs to sell?
(a) An asset that is trading in an active
market.
(b) The price in a binding sale agreement.
(c) Information available that determines the
disposal value of the asset in an armslength
transaction.
(d) The carrying value of the asset.
Answer: (b)
8. When calculating the estimates of future
cash
flows, which of the following cash flows
should not
be included?
(a) Cash flows from disposal.
(b) Income tax payments.
(c) Cash flows from the sale of assets
produced
by the asset.
(d) Cash outflows on the maintenance of the
asset.
Answer: (b)
9. When deciding on the discount rate that
should
be used, which factors should not be taken
into account?
(a) The time value of money.
(b) Risks that relate to the asset for which
future
cash flow estimates have not been adjusted.
(c) Risks specific to the asset for which
future
cash flow estimates have been adjusted.
(d) Pretax rates.
Answer: (c)
10. An impairment loss that relates to an
asset that
has been revalued should be recognized in
(a) Profit or loss.
(b) Revaluation reserve that relates to the
revalued
asset.
(c) Opening retained profits.

(d) Any reserve in equity.

Answer: (b)
11. A cash-generating unit is
(a) The smallest business segment.
(b) Any grouping of assets that generates
cash
flows.
(c) Any group of assets that is reported
separately
to management.
(d) The smallest group of assets that
generates
independent cash flows from continuing use.
Answer: (d)
12. Goodwill should be tested for
impairment
(a) If there is an indication of impairment.
(b) Annually.
(c) Every five years.
(d) On the acquisition of a subsidiary.
Answer: (b)
13. Where part of the cash-generating unit
is disposed
of, the goodwill associated with the element
disposed of
(a) Shall be written off to the income
statement
entirely.
(b) Shall not be included in the calculation of
gain or loss on disposal.
(c) Shall be included in the calculation of
gain
or loss on disposal.
(d) Shall be written off against retained
profits.

Answer: (c)
14. When impairment testing a cashgenerating unit,
any corporate assets, such as the head
office business
or computer equipment, should
(a) Be allocated on a reasonable and
consistent
basis.
(b) Be separately impairment tested.
(c) Be included in the head office assets or
parents
assets and impairment tested along
with that cash-generating unit.
(d) Not be allocated to cash-generating
units.
Answer: (a)
15. When allocating an impairment loss,
such a loss
should reduce the carrying amount of which
asset
first?
(a) Property, plant, and equipment.
(b) Intangible assets.
(c) Goodwill.
(d) Current assets.
Answer: (c)
16. Which of the following impairment
losses should
never be reversed?
(a) Loss on property, plant, and equipment.
(b) Loss on goodwill.
(c) Loss on a business segment.
(d) Loss on inventory.
Answer: (b)