Under IAS 36, what is the recoverable amount of an asset?
Correct answer: B. The higher of fair value less costs of disposal and value in use
- A. The lower of cost and fair value
- B. The higher of fair value less costs of disposal and value in use
- C. The higher of historical cost and residual value
- D. The lower of carrying amount and value in use
Explanation
Recoverable amount is the higher of fair value less costs of disposal and value in use. An impairment loss arises when carrying amount exceeds this recoverable amount.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
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