Which of the following statements about asset impairment is true? Ch. 8 slides.
A. : The impairment journal entry debits Impairment Loss ( , ) and credits Accumulated Depreciation ( , ).
B. If a company has an asset with a net book value of
$6.0
million and estimates the future cash flows to be received over the asset's remaining life to be
$6.5
million, no impairment has occurred.
C. The last step in determining whether there is an asset impairment is to evaluate whether there are economic indicators of impairment. For example, was there a significant decrease in the price of the asset or a negative change in the business environment.
D. The last step in impairment testing is to compute and record the impairment loss. If a company has an asset with a net book value of
$6.0
million and fair market value of
$5.3
million, then the company will credit Impairment Loss ( , ) for
$0.7
million.
E. If a company impairs a long-lived asset and market conditions subsequently improve, the company is then allowed to increase the value of the asset back up to its original value.