why? or…what is deductible mean? it’ s above the line item so it is deducted from income, so lowers income…hence lowers tax, right?
Not really. The income statement and the tax report are 2 different things. The income statement is issued for the holders, investors, SEC, the tax report is submitted to Internal Revenue Services. Impairment is a sort of an “estimation of loss” on an asset. Nothing that is an “estimate” hits the tax report, it will not be deducted until certain (say you sell the asset and you realize a loss). It will not be reported to IRS until you dispose of the asset.
Vanessa, are you referring to book or tax here? or could you rephrase your question a little bit. Impairment losses are reflected in the books, not for tax purposes until certain like Map1 said.
Understand per the tax code they use the direct write off method where as income statement use allowance method