Current carrying value of unprofitable stores

Assignment Help Business Management
Reference no: EM1333680

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 (see the Case in Point below).

Asset dispositions occur frequently in many businesses, and the gains and losses that result often are material in amount. For instance, recent financial statements of U.S. Steel and Dow Chemical reported gains on asset dispositions of $40 million and $24 million, respectively.
The income statements of Consolidated Freightlines and Ford Motor Company, on the other hand, reported losses on asset dispositions of $4 million and $235 million, respectively.

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.

Reference no: EM1333680


Write a Review


Business Management Questions & Answers

  Robert nardelli leadership style

Clearly describe Robert Nardelli's leadership style in terms of Leadership Theory, incorporating the following theories within your paper:

  A companys products are born

A company's products are born, grow, mature, also then decline, just as living things do.

  Determining ethics and social responsibilities

Why should entrepreneurs be concerned with ethics or social responsibility (how organization responds to the needs of its stakeholders)? What are the benefits of ethical and the social responsibility standards being incorporated into the venture?

  Organizational politics use your power appropriately

From the e-Activity study the company you investigated and your results from the self-assessment. Propose ways to confirm that you use your power appropriately and effectively.

  The Business Strategy Game (BSG) a PC-based appoach

The Business Strategy Game (BSG) is basically a PC-based approach, devised to highlight the actual-world character of the business world and structured so that individuals can operate a corporation within intense competition against corporations r..

  Mortgage interest rate-monthly revenue

You have been hired as the Chief Financial Officer, a newly created position, for a rapidly growing nonprofit organization that sells discounted clothing.

  Employees feel empowered and share control in organization

Learner is provided with a discussion on how a leader can allow employees to feel empowered and share control in the organization leading to a more effective and efficient organization.

  The iso 9000 series of standards is generic in scope

The new Minister of Health wants to improve service delivery in the public hospitals and wants to implement ISO standards. What are the benefits of ISO Registration. The ISO 9000 series of standards is generic in scope. Briefly describe the thre..

  Ethics regarding promotional and marketing strategies

Think about your own consumer response to promotional strategies of specific product which rely on vague terms, or unsubstantiated claims to attract their target market. In at least 300 words, please address the following:

  Dedicated creamery designed for international distribution

Build a dedicated creamery designed for international distribution. The creamery would be built near a major FedEx or UPS shipping hub, and ice cream produced there would include preservatives. Overseas order from Asian, as well as Europe, Austral..

  Describes contingency approaches

Which of the subsequent BEST describes contingency approaches Contingency approaches are leadership styles that seek to delineate the characteristics of situations. Contingency approaches are leadership styles appropriate for one situation w..

  Business ethics in airline

Using the Normative Ethics describe the ethics of this situation in context of benefits and cost to the airline for taking the action for proper reporting and grounding their planes.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd