f the fair value less costs to sell cannot be determineda.The net realizable value is used.b.The carrying value of the asset remains the same.c.The recoverable amount is the value-in-use.d.The asset is not impaired.
Question
f the fair value less costs to sell cannot be determineda.The net realizable value is used.b.The carrying value of the asset remains the same.c.The recoverable amount is the value-in-use.d.The asset is not impaired.
Solution 1
If the fair value less costs to sell cannot be determined, then the recoverable amount is the value-in-use. This is because the recoverable amount of an asset is the higher of its fair value less costs to sell and its value-in-use. If the fair value less costs to sell cannot be determined, we have to rely on the value-in-use. Therefore, the correct answer is c. The recoverable amount is the value-in-use.
Solution 2
If the fair value less costs to sell cannot be determined, then the recoverable amount is the value-in-use. This is because the recoverable amount of an asset is the higher of its fair value less costs to sell and its value-in-use. If the fair value less costs to sell cannot be determined, we default to the value-in-use. Therefore, the correct answer is c. The recoverable amount is the value-in-use.
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