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12-16Q

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Intermediate Accounting (Kieso)
Found in: Page 637

Short Answer

Last year, Zeno Company recorded Impairment on an intangible asset held for use. Recent appraisals indicate that the asset has increased in value. Should Zeno record this recovery in value?

Impairment losses on assets kept for use may not be reversed under US GAAP.

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Step by Step Solution

Meaning of Impairment

When the book value of an asset exceeds the recoverable amount, an impairment cost must be recorded as an expense.

When does Impairment occur?

Impairment happens when the fair market value of a business asset depreciates more than the asset's book value on the company's financial statements.

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