这道题是什么知识点？

问题如下：

Question Assuming no impairment, the abandonment of PP&E on the financial statements will result in a:

选项：

A.decrease of £10 million in PP&E. B.loss of £1 million on the income statement. C.decrease of £1 million on the cash flow statement.

解释：

Solution

1. Correct because when an asset is retired or abandoned, the accounting is similar to a sale, except that the company does not record cash proceeds. Assets are reduced by the carrying amount of the asset at the time of retirement or abandonment, and a loss equal to the asset's carrying amount is recorded. The carrying amount of the asset is 10 at the time of abandonment. As a result, the asset's carrying value will be reduced to 0, resulting in a loss of 10 on the income statement, and will have no cash impact on the cash flow statement.

2. Incorrect because it calculates the loss of 1 on the income statement by using the fair value at the time of abandonment which is incorrect because the cost model is applied.

3. Incorrect because there should be no cash impact on the cash flow statement. However, the decrease of 1 on the cash flow statement is due to the incorrect recognition of the 1 fair value at the time of abandonment.

Analysis of Long-Term Assets

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