Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 35

The Write-Down of Impaired Assets
For several years, a number of Food Lion, Inc., grocery stores were unprofitable.he company closed some of these locations.t was apparent that the company would not be able to recover the cost of the assets associated with the closed stores.hus, the current value of these impaired assets had to be written down.
A note in the financial statements indicated that the company tests assets for impairment when.ircumstances indicate that an impairment may exist.or impairment testing, each store is considered a cash-generating unit.tores with potential impairments are tested by comparing their carrying value with their recoverable amounts.
a.Explain why Food Lion wrote down the current carrying value of its unprofitable stores.
b.Explain why the write-down of impaired assets is considered a noncash expense.