At the end of its 2013 fiscal year, a triggering event caused Janero Corporation to perform an impairment test for one of its manufacturing facilities. The following information is available: The manufacturing facility is:
A)Impaired because its book value exceeds undiscounted future cash flows.
B)Not impaired because its book value exceeds undiscounted future cash flows.
C)Not impaired because it continues to produce revenue.
D)Impaired because its book value exceeds fair value.

Question

At the end of its 2013 fiscal year, a triggering event caused Janero Corporation to perform an impairment test for one of its manufacturing facilities. The following information is available:  The manufacturing facility is:
A)Impaired because its book value exceeds undiscounted future cash flows. 
B)Not impaired because its book value exceeds undiscounted future cash flows. 
C)Not impaired because it continues to produce revenue. 
D)Impaired because its book value exceeds fair value.

Quizplus · Accepted Answer

Based on the information provided, the triggering event indicates that there might be an impairment. Since the book value of the facility is greater than the undiscounted future cash flows, the facility is considered impaired and must be written down to its fair value.

At the End of Its 2013 Fiscal Year, a Triggering