Because all capital assets may become impaired-because of changes in technology or other reasons-the FASB and GASB both require impaired assets to be written down using the same criteria.

Question

Quizplus · Accepted Answer

FASB standards requires commercial entities to report an impairment of a capital or intangible asset if the sum of the undiscounted cash flows that it expects to receive from using the asset in the future is less than its fair value. GASB standards require governments to estimate the cost to restore the service utility of a capital asset that has been physically damaged. When an impairment occurs because of a change in technology or of legislation affecting the asset's use, governmental capital or intangible assets are written down based on a comparison of the service units that the asset could have provided before or after the impairment.

Because All Capital Assets May Become Impaired-Because of Changes in Technology