How mcdonald’s records an impairment charge

Reference no: EM131408302

The footnotes to the 2008 financial statements of McDonald's Corporation contain the following statement:
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, long-lived assets are reviewed for impairment annually . . . and . . . if an individual restaurant is determined to be impaired, the loss is measured by the excess of the carrying amount of the restaurant over its fair value as determined by an estimate of discounted future cash flows.

REQUIRED:

a. Discuss the circumstances that could indicate that a McDonald's restaurant may be impaired.

b. Describe how McDonald's records an impairment charge.

c. How could management use the concept of an impairment charge to manage earnings?

Reference no: EM131408302

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