Investments must be evaluated each period to determine if an Impairment of the Investment has occurred. Describe the difference between a Temporary Impairment and Other Than Temporary Impairment. If the security is written-down, can a write-up occur in the future? Solution In determining when an impairment is other than temporary, the following are example indicators that should be considered: fair value is significantly below cost the decline in fair value has existed for an extended period of time the financial condition of the issuer has deteriorated as evidenced by significant or recurring operating losses, poor cash flows and / or deteriorating liquidity ratios the issuer had a going concern qualification in the independent auditors .

1. Investments must be evaluated each period to determine if an Impairment of the Investment has
occurred. Describe the difference between a Temporary Impairment and Other Than Temporary
Impairment. If the security is written-down, can a write-up occur in the future?
Solution
In determining when an impairment is other than temporary, the following are example
indicators that should be considered:
fair value is significantly below cost
the decline in fair value has existed for an extended period of time
the financial condition of the issuer has deteriorated as evidenced by significant or recurring
operating losses, poor cash flows and / or deteriorating liquidity ratios
the issuer had a going concern qualification in the independent auditors
In determining when an impairment is other than temporary, the following are example
indicators that should be considered:
fair value is significantly below cost
the decline in fair value has existed for an extended period of time
the financial condition of the issuer has deteriorated as evidenced by significant or
recurring operating losses, poor cash flows and / or deteriorating liquidity ratios
the issuer had a going concern qualification in the independent auditors