Which of the Following Is a Correct Statement About Asset

question 187

Multiple Choice

Which of the following is a correct statement about asset impairment?

• A) An asset is impaired if the net book value exceeds the estimated future cash flows.
• B) If an asset is impaired, the future cash flows will be less than the fair value.
• C) Under GAAP, an asset that has been written down because of impairment can be written back up if it increases in value in the future.
• D) If an asset is impaired, the impairment loss is the difference between the net book value and the fair value.

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Definitions:

Extraction Costs

The expenses associated with the removal of raw materials from the earth or the harvesting of natural resources.

User Costs

Expenses incurred by consumers or firms for the use of assets, services, or capital, which can affect decisions on consumption or investment.

Price of Resource

The cost associated with acquiring, producing, or utilizing a resource, which may include materials, labor, or capital.

Optimal Extraction Level

The most efficient point at which a resource can be extracted or harvested to balance usage and sustainability over time.