Prior to the Introduction of Impairment Testing Companies Had Attempted

question 28

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) because 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.

---

Definitions:

Effective Communication

The ability to convey information to others successfully and efficiently, ensuring mutual understanding.

Specialized Communication

Specialized Communication involves the use of specific language, tools, or platforms for effective exchange of information in particular fields or disciplines.

Relevant Examples

Relevant Examples are instances or cases that are directly connected to the topic at hand and serve to clarify or exemplify the subject matter.

Supportive Communication

A style of communication that is based on empathy, understanding, and encouragement to foster positive relationships.