Asked by Normaly Valdez on Jul 22, 2024
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Which of the following statements about asset impairments is false?
A) Asset impairment loss is the difference between an asset's net book value and its estimated future cash flows.
B) If an asset is impaired,a loss would be recognized in the period it can be estimated.
C) Impairment will lead to writing down the asset's net book value.
D) Asset impairment occurs when the estimated future cash flows are less than the asset's net book value.
Asset Impairments
The reduction in the recoverable value of a fixed asset or goodwill below its book value, reflected in the financial statements as an expense.
Future Cash Flows
Estimated amounts of money expected to be received or paid out by an entity in the future as a result of financial transactions or business operations.
Net Book Value
The value at which an asset is carried on a balance sheet, calculated as the asset's original cost minus accumulated depreciation and impairments.
- Acquire knowledge about the methodology and repercussions linked to asset impairment, as well as how to calculate losses.
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Learning Objectives
- Acquire knowledge about the methodology and repercussions linked to asset impairment, as well as how to calculate losses.
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