Depreciation and impairment are different in that:
A)only depreciation results in a decrease in net income.
B)only impairment represents the decline in the current value of the related asset.
C)only depreciation results in a decrease to total assets.
D)only impairment results in a decrease to total assets.

Question

Quizplus · Accepted Answer

As a result of recording depreciation,an asset's book value declines as it ages.However,because depreciation is not intended to report an asset at its current value,an asset's book value could exceed its current value,particularly if the asset becomes impaired.Impairment occurs when events or changed circumstances interfere with a company's ability to recover the value of the asset through future operations.If this occurs,the book value should be written down to what the asset is worth (called fair value)with the amount of the write-down reported as an impairment loss.

Depreciation and Impairment Are Different in That