Impairment Flashcards
1
Q
When to record an impairment loss, and how to calculate it?
A
An impairment loss must be recorded when net carrying value is greater than discounted future cash flows. Impairment loss = FV - Carrying value.
2
Q
what are the rules of impairment testing and impairment losses?
A
A company will perform impairment testing and record necessary entries for all assets prior perform testing goodwill. Reporting units (segments) will have a separate impairment testing, and if FV < carrying value = impairment of goodwill as all other assets have been tested and adjusted.
