Companies should review their property, plant, and equipment whenever events or changes in circumstances indicate that...
Companies should review their property, plant, and equipment whenever events or changes in circumstances indicate that the book value may not be recoverable. Which of the following is NOT an example of such events or changes in circumstances?
a) a significant change in the way the asset is used
b) costs of constructing the assets that are less than the planned amount
c) a current period operating loss
d) a negative cash flow from operating activities
Homework Answers
Option B:
Costs of constructing the assets that are less than planned amount is not a circumstance that indicates cost is less than recoverable value.
Current period operating loss, negative operating cash flows, and significant changes in usage of the asset are circumstances that indicates recoverable value maybe lower than cost of the asset.
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