- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 7. Analysis of Long-Term Assets
- Subject 2. Impairment of Assets
CFA Practice Question
The information below applies to a manufacturing equipment held for use:
Carrying value: $200k
Undiscounted future cash flows: $220k
Discounted future cash flows: $180k
Fair value: $170k
Under U.S. GAAP, how much should the impairment loss be?
Correct Answer: Zero
Since the carrying value is less than the undiscounted future cash flows, no impairment loss should be recognized.
User Contributed Comments 5
| User | Comment |
|---|---|
| cong | Very good question. |
| endurance | cong, you're right |
| johntan1979 | i'm lovin' it |
| davcer | sometimes you go directly to the calculations without verifying if u really need it. |
| Sp1993 | Bloody good question. Lesson to be learnt - don't jump straight in to the calculations when you see indicative figures, take a step back and look for what the question is really testing. |