The First Step in Determining Whether an Impairment Has Occurred

question 101

True/False

The first step in determining whether an impairment has occurred is to estimate the future net cash flows expected from the use of that asset and its eventual disposition.

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Definitions:

Owners' Claims

The financial interest or claims that business owners have in the assets of their company, often calculated as equity.

Assets

Economic resources owned or controlled by a business or individual, expected to produce value or benefit in the future.

Investing Activities

Financial actions related to acquiring or disposing of long-term assets and other investments.

Long-term Borrowing

Debt obligations or loans that are due to be repaid over a period longer than one year, often used for large capital investments.