Question

X Company acquired a printing press for $350,000 that is expected to have a useful life of 20 years and a salvage value of $20,000. It is expected that the press will have very little resale value but is essential to the company as it is the company’s primary revenue producing asset. When is X Company required to evaluate the asset for impairment?

		At least annually.
		Only when events or circumstances indicate that the carrying value will not be recovered during the asset’s remaining life.
		Whenever financial statements are prepared.
		When the fair value of the printing press exceeds its carrying value.

Answer 1

Only when events or circumstances indicate that the carrying value will not be recovered during the asset’s remaining life.

This is based on Conservatism principle that says provide for future loses but don't account for the future gains.

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