When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:
A)an asset impairment gain,if the value of the cash flows exceeds the asset's book value.
B)an asset impairment loss,if the value of the cash flows exceeds the asset's book value.
C)an asset impairment gain,if the asset's book value exceeds the value of the cash flows.
D)an asset impairment loss,if the asset's book value exceeds the value of the cash flows.

Question

Quizplus · Accepted Answer

When the estimated future cash flows from an asset are less than the book value of the asset, the company records an asset impairment loss. This means that the asset's carrying value on the balance sheet is reduced to reflect its impaired value.

When a Company Determines That Estimated Future Cash Flows from an Asset