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CMA Final · Corporate Financial Reporting · Property, Plant and Equipment (Ind AS 16)

Ind AS 16 defines recoverable amount of an asset as:

Recoverable amount is the higher of fair value less costs of disposal and value in use. It is not the lower of the two, and the amount obtainable after useful life net of disposal costs is residual value, a different concept.

  1. AThe higher of fair value less costs of disposal and value in useCorrect
  2. BThe lower of fair value less costs of disposal and value in use
  3. CThe higher of carrying amount and fair value less costs of disposal
  4. DThe amount obtainable on disposal after deducting costs, at the end of its useful life

Explanation

Recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. The lower-of option reverses the rule. The last option describes residual value, not recoverable amount.

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