ASSESSMENT CASE PAPER ANALYSIS / TUTORIALOUTLET DOT COM ASSESSMENT CASE PAPER ANALYSIS / TUTORIALOUTLET DO | Page 14

B. $45,000 C. $56,000 D. $63,000 2. A company leases trucks and properly classifies the leases into capital leases. The leases have a ten-year term and the lease calculations were done three years ago when interest rates were lower. Which of the following is the appropriate accounting treatment, if any, for the application of the fair value option to lease transactions? A. Leases are not eligible for the fair value option. B. Recognize the change to fair value accounting with a cumulative adjustment to beginning retained earnings. C. Recognize the change to fair value accounting with an unrealized loss in the income statement. D. Recognize the change to fair value accounting with an unrealized loss in accumulated other comprehensive income. 3. An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying Value: $100,000,000 Sum of the undiscounted cash flows 95,000,000 Fair value 80,000,000 What is the value of the impairment loss? A. B. C. D. $0 $5,000,000 $15,000,000