(a) While studying a firm's income statement, you notice the line item:
Amortization expense = $400,000
Write a short report to a client of yours who is interested in providing a loan to this firm. In other words, what does the $400,000 amount mean, and perhaps more importantly, what does it not imply?
(b) Also, you come across the following line item:
Impairment loss, property = $600,000
What does this amount represent, when is it recognized, what may have caused it, and how does it affect subsequent amortization, assuming that the property is not a total loss?

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The Answer of (a) While studying a firm's income statement, you notice the line item:
Amortization expense = $400,000
Write a short report to a client of yours who is interested in providing a loan to this firm. In other words, what does the $400,000 amount mean, and perhaps more importantly, what does it not imply?
(b) Also, you come across the following line item:
Impairment loss, property = $600,000
What does this amount represent, when is it recognized, what may have caused it, and how does it affect subsequent amortization, assuming that the property is not a total loss?

(A) While Studying a Firm's Income Statement, You Notice the Line