A Recently Issued FASB Standard Requires That an Impairment Loss

question 69

Essay

A recently issued FASB standard requires that an impairment loss be recognized if the sum of the expected future net cash inflows (undiscounted and without interest charges)is less than the carrying value of the asset.The amount of the impairment loss recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset.
Provide examples of events or changes in circumstances that indicate that the recoverability of the carrying amount of an asset may have been impaired.
Evaluate the recognition criterion proposed by the FASB,specifically addressing the issue of using the undiscounted sum of the future net cash flows.

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Definitions:

Tsunami

A series of ocean waves with very long wavelengths caused by large-scale disturbances such as earthquakes under the sea.

Liquefaction

Loss of cohesion when grains in water-saturated soil or sediment lose grain-to-grain contact, as when shaken during an earthquake.

Landslides

The action of gravity pulling rocks, soil, or debris downward on a slope.

Reflected

Pertains to light, sound, or heat being thrown back by a surface without absorbing it.