What is the two-tier test used to determine if a fixed asset has suffered impairment and to calculate the amount of the impairment loss?© BrainMass Inc. brainmass.com October 10, 2019, 7:10 am ad1c9bdddf
For GAAP (as opposed to IFRS), the two-tier test is used to calculate any decrease in value of long term assets. Long term assets may include fixed assets as well as goodwill.
Any impairment loss resulting from the tests will be written off and included in operating income.
Step 1: Compare the carrying amount on the company balance sheet to the undiscounted cash ...
The solution provides the rules for calculating an impairment loss using the two-tier test for impairment. References are provided.