For Each of the Following Scenarios, Use the Two Step

question 66

Essay

For each of the following scenarios, use the two step approach to determine whether a long-term asset has been impaired and, if so, the amount of loss that should be recorded.
a. Equipment
Net book value: $450,000
Estimated future cash flows: $400,000
Fair value: $425,000
b. Patent
Net book value: $650,000
Estimated future cash flows: $750,000
Fair value: $700,000

---

Definitions:

Corporate Social Responsibility

Practices and policies undertaken by corporations to promote positive social and environmental impacts beyond legal requirements.

Organization's Reputation

The collective perceptions held by stakeholders about a company's credibility, reliability, and trustworthiness, influencing its success.

Voluntary Severance Packages

Offers made by employers to employees, providing incentives, often financial, to voluntarily leave the company, typically during downsizing.

Downsizing Strategy

A business strategy that involves reducing the company's size through workforce reduction, closing divisions, or selling off parts of the firm to improve efficiency or financial health.