Practice prompt · Q:long-lived-asset-estimates-and-exits/impairment-sequence-001

Preserve the held-and-used impairment sequence

Formative conceptual control on scope, indicator, recoverability screening, and fair value measurement.

Updated Aug 6, 2026 Review due Nov 6, 2026

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Which sequence correctly handles the bounded US GAAP held-and-used impairment case before any arithmetic conclusion is accepted?

Choose the best answer. A Confirm scope, unit of account, and indicator; compare carrying amount with applicable undiscounted cash flows; only after a failed screen measure carrying amount less fair value. B Compare carrying amount directly with fair value whenever market evidence exists; use undiscounted cash flows only to explain the resulting loss. C Continue ordinary depreciation because accumulated depreciation already captures any decline in expected benefits. D Record the adverse indicator itself as a loss, then determine the asset group and amount during the next reporting period.

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Answer: A

Choice A correctly sequences scope and unit-of-account controls, the undiscounted recoverability screen, and—only after failure—the fair-value loss measurement. The other choices skip, reverse, or replace required stages.