Which of the following is NOT listed as a way an asset can lose value?

• A. Significant decline in market value
• B. Improved economic performance relative to expectations
• C. Obsolescence or physical damage
• D. Significant adverse changes in business

Answer: (B)

An asset loses value when its carrying amount exceeds its recoverable amount, and impairment indicators point to where that could happen. Classic signals include a significant decline in market value, obsolescence or physical damage, and significant adverse changes in the business environment. These factors can reduce the recoverable amount (the higher of fair value less costs of disposal and value in use), leading to an impairment loss. Improved economic performance relative to expectations, on the other hand, would not reduce recoverable amount; it suggests the asset’s value is at least maintained or even enhanced, so it does not indicate impairment.