When events or changes in circumstances reduce the estimated future cash ﬂows of long-lived assets below their book value, the book values should be written down (by recording a loss) to the fair value of the assets.

Question

Quizplus · Accepted Answer

This statement is true according to the accounting principle of impairment. When the estimated future cash flows of a long-lived asset decreases, the company should adjust/book the loss by reducing the book value to the fair value of the asset.

When Events or Changes in Circumstances Reduce the Estimated Future