Doing some problems in the book and one answer says switching from straight line to accelerated depreciation increases cash flow from operations because of the tax savings on the decrease of net income, and then the next answer it says operating cash flows are not effected by an impairment loss but it does decrease net income. Wouldnt that tax savings also go through to CFO?
good question!
does impairement loss appear before or after tax ? probably before tax
that said, is impairement of long lived assets (mainly investments) supposed to increase CFO or CFI ?
hmm
Impairment loss= non-cash expense. Maybe it’s because it’s mostly for PPE ? is it?
Dude, I don’t think the tax authority allows you to claim impairment loss as tax deductible expenses. To double confirm, go check the tax code.
Impairment losses aren’t tax-deductible: tax authorities make you wait until you have a taxable event (i.e., you sell the item) before you can claim the loss.
Thus, impairments generate DTAs.