Current carrying value of unprofitable stores
Course:- Accounting Basics
Reference No.:- EM13149081

Assignment Help
Assignment Help >> Accounting Basics

For several years, a number of Food Lion, Inc., grocery stores were unprofitable. The company closed, and continues to close, some of these locations. It is apparent that the company will not be able to recover the cost of the assets associated with the closed stores. Thus, the current value of these impaired assets must be written down. A recent Food Lion income statement reports a $9.5 million charge against income pertaining to the write-down of impaired assets.

A. Explain why Food Lion must write down the current carrying value of its unprofitable stores.

B. Explain why the recent $9.5 million charge to write down these impaired assets is considered a noncash expense.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Binomial acceptance sampling. For a binomial acceptance sampling plan with sample size n = 20 and acceptance number y= 0, calculate and plot the OC function. Do the same for
A machine costing Rs. 10.0 million and having book value of Rs. 6.5 million was traded-in with another machine having a fair market value of Rs. 7.0 million with an addition
You are a senior auditor working on a client who holds a large portfolio of mortgage obligations. Due to the soft housing market, the client has established a fairly signifi
Indicate increase (+), decrease (-), or no effect (NE). Make sure your answer is CLEAR in terms of all items below (1-13) and that you make an entry for EACH column (Net Inc
When a total count was taken on December 31, 2010, it was determined that $20,000 of merchandise was still on hand. What was Salley's gross profit/loss as of December 31, 2010
If Kroger had Whole Foods' number of days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual aver
A mutual fund manager claims that at least 70% of the stocks she selects will increase in price over the next year. We examined a sample of 200 of her selections over the pa
Transfer pricing is probably one of the biggest tax issues facing taxing authorities. Transfer pricing involves allocating revenues and costs between countries in order to c