Which of the following statements is false? Impairment charges do not need to be

Question

Which of the following statements is false? Impairment charges do not need to be analyzed since they are generally a non-recurring expense. Operating expenses should be tracked in terms of trends, absolute amounts, relationship to sales, and relationship to industry competitors. Operating expenses can be easily analyzed by preparing a common-size income statement. It is important to analyze operating expenses over which management exercises discretion and that have considerable impact on the firm’s profitability.

Explanation / Answer

Option A

Impairment charges are the permanent reduction in the value of an asset. Yes, this is non-recurring, however, it can adversely affect the net income of the company. Therefore, it should also be analyzed with other components of net income.

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