Question
Under the indirect method, why are depreciation and amortization added back to net income in CFO?
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Answer
They are non-cash expenses.
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Question
If a company expenses a long-lived asset cost immediately instead of capitalizing it, how is current-period income affected?
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Answer
Current-period income is lower.
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Question
How does a goodwill impairment affect earnings and reversals?
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Answer
It lowers net income permanently and cannot be reversed.
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Question
How are finite-life and indefinite-life intangible assets treated after recognition?
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Answer
Finite-life intangibles are amortized; indefinite-life intangibles are tested for impairment.
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