Dustin's Donuts Experienced a Decrease in the Value of the Trademark

question 50

Multiple Choice

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

• A)an impairment charge.
• B)depreciation expense.
• C)an operating expense.
• D)goodwill.

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Definitions:

Installation Costs

Expenses associated with setting up or installing equipment, machinery, or infrastructure necessary for the operations or activities of a business.

Depreciation Process

The systematic reduction in the recorded cost of a fixed asset over its useful life, reflecting its decrease in value over time.

Matching Principle

An accounting principle that dictates expenses should be recognized in the same period as the revenues they help to generate.

Market Value

The present rate at which a service or asset is available for purchase or sale in the marketplace.