You are a staff accountant in the controller's office of a company that operates warehouses in several states. One location has not been performing well and your department manager, R.U. Impared, is concerned that the plant and equipment may be impaired and may need to be written down. Since this has never occurred in the company before, Mr. Impared has asked you to research asset impairments. Mr. Impared wants to know:
1. What is the authoritative guidance for asset impairments?
2. What is the scope of the standard ?
3. What are some examples of events that would cause an asset to be tested for impairment?
4. Does it appear that the company should perform an impairment test? Explain.
5. What is the best evidence of fair value? Describe alternate methods of estimating fair value.
Write a memo to Mr. Impared with the results of your research.