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
In 2010, the company purchased new machinery that should increase production dramatically. The company has decided to depreciate this machinery on an accelerated basis, even t
Vannoy Corporation will invest $30,000 every January 1st for the next six years (2012 - 2017). If Wagner will earn 12% on the investment, what amount will be in the investme
If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in 1, 2, and 3 abov
Salaries and Wages Expense $14,000; Insurance Expense $1,800; Rent Expense $3,900; Supplies Expense $1,500; and Depreciation Expense $1,000. Prepare an income statement for
Ricky has rented a house from Sarah since last year. The rent is usually $800 per month, but Sarah reduced the monthly rent down to $600 for all 12 months. How much total re
Kettle goods company has a unit selling price of 500 $, variable cost per unit $ 300 and fixed costs of $170,000. Compute the break even point in units and in sales dollars.
Information Technology, Inc., is a supplier of math coproces- sors (computer chips) used to speed the processing of data for analysis on personal computers. Based on an anal
The Pew Internet & American Life Project routinely conducts surveys to gauge the impact of the Internet and technology on daily life. A recent survey asked respondents if th