Asked by Yania Isabel Romero on Apr 27, 2024
Verified
The FASB has been able to guard against management manipulation of earnings as a result of asset impairments by
A) fining any managers found guilty of such manipulation.
B) requiring restoration of previously recognized impairment losses.
C) prohibiting restoration of previously recognized impairment losses.
D) relying on State Boards of Public Accountancy to police the transactions.
Management Manipulation
The unethical practice of altering financial data or reports to distort a company’s financial health or performance.
Asset Impairments
A reduction in the book value of an asset when its market value falls below its carrying amount on the balance sheet.
- Understand the variances and practical applications of IFRS and U.S. GAAP concerning asset impairment and reversals.
Verified Answer
SS
sonia sodembaApr 29, 2024
Final Answer :
C
Explanation :
The FASB prohibits restoration of previously recognized impairment losses to prevent management from manipulating earnings by reversing losses that were properly recognized in previous accounting periods.
Learning Objectives
- Understand the variances and practical applications of IFRS and U.S. GAAP concerning asset impairment and reversals.
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