Question

Which is a true statement:

a. Under US GAAP, a company will always have to impair a building if a triggering even occurs and the fair value is less than the book value.

b. unless it is sold, the book value of a trademark will never decrease because it is not amortized.

c. an oil and gas company using the full cost method will generally record a higher depletion expense than a company using the successful effort method if they extract the same amount of oil in a given year.

d. firms are required to make an adjusting journal entry to retained earnings and a disclosure about the effect on net income when changing depreciation methods.

e. when a firm impairs goodwill under US GAAP, goodwill is debited for the difference between the book value and fair value, assuming the beginning balance of goodwill is at least as large as this difference.

Answer 1

Answer is .a. Under US GAAP, a company will always have to impair a building if a triggering even occurs and the fair value is less than the book value.

When Fair value is less than book value, assets is required to be impaired