Both Ron and Christine are calculating the loss of impairment for an asset. Ron is calculating the difference between the book v

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3 years ago

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Both Ron and Christine are calculating the loss of impairment for an asset. Ron is calculating the difference between the book v

alue and the market value. Christine is calculating the difference between book value and the present value of future cash flows. Why are they using different methods?

Social Studies

1 answer:

Tanzania [10] · Answer 1 · 2021-12-16T13:25:06+03:00

Answer:

Explanation:

The difference is mainly that the asset is a generator of periodic cash flows, that is, if Christine is evaluating the present value of the flows generated by the asset, she does so due to a financial evaluation while Ron does it from a point of accounting view and this is called fair value according to the IFRS.