Intermediate Accounting, Thirteenth Edition

Chapter 11. DEPRECIATION, IMPAIRMENTS, AND DEPLETION

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

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Do They Matter?

The axiom on Wall Street has been that huge one-time charges don't really count. These highly unusual events don't truly reflect how a company is faring, so Wall Street ignores them. In the last few years write-offs have approached all-time highs. For example, over one-third of the companies surveyed by Accounting Trends and Techniques in 2007 reported asset impairments.

However, some companies have taken write-offs so regularly that they really are a reflection of ongoing business. When you adjust for the write-offs, earnings turn out to be far worse—and the companies' shares of stock turn out to be far more expensive. Presented below are data from three companies ...