Detecting Accounting Fraud 1st Edition by Cecil Jackson

Exercise 16

In the first quarter of the fiscal year, Brace Company discovers that an asset is impaired and the asset will need to be written down by $4 million. Which of the following statements is correct? (a) Brace Company can write down the asset by $4 million when it prepares its annual financial statements.
(b) Brace must write off the $4 million by writing off $1 million in each quarter's financial statements in the year that it discovered that the asset was impaired by $4 million.
(c) Brace must write down the asset by $4 million in the first quarter's quarterly financial statements.
(d) Brace can write down the asset by $4 million evenly over three years, beginning in the year that it discovered that the asset was impaired.