Prior to the Introduction of Impairment Testing Companies Had Attempted

question 18

Multiple Choice

Prior to the introduction of impairment testing companies had attempted to manipulate their accounts through amortisation:

• A) Because where managers were rewarded based on profits attained it was in their best interests to reduce expenses while they held that position.
• B) Because contractual arrangements such as debt covenants often required asset values to be maximised.
• C) Recording higher amortisation expenses allowed profits to be reduced, thus allowing tax payments to be minimised without any cash outflows.
• D) Because where managers were rewarded based on profits attained it was in their best interests to reduce expenses while they held that position; and because contractual arrangements such as debt covenants often required asset values to be maximised.
• E) All of the given answers.

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Nondefensive Stance

An approach or mindset of being open to feedback, criticism, or dialogue without feeling threatened or needing to justify oneself.

Presenting Challenges

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An individual's positive perception of self, encompassing self-esteem, self-worth, and a balanced understanding of one's strengths and weaknesses.