When measuring an impairment loss for a$$ long$-$term operating$$ asset, must firms determine the fair value using a discounted$$ cash$-$flow model? Explain.

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Part $1$

A$.$

No$.$ Discounted cash flow models are only one of several ways to measure fair value. For fair$$ values, U$.$S$.$ GAAP allows other$$ approaches, such as accounting assumptions and valuation models.

B$.$

No$.$ Discounted cash flow models are only one of several ways to measure fair value. For fair$$ values, U$.$S$.$ GAAP allows other$$ approaches, such as the use of quoted market$$ prices, market$$ comparables, or management assumptions and valuation models.

C$.$

Yes. Firms must determine the fair value using a discounted cash flow model. Under U$.$S$.$ GAAP, discounted cash flow models are the closest to market$$ price, when market price is not available.

D$.$

Yes. Firms must determine the fair value using a discounted cash flow model. U$.$S$.$ GAAP does not allow other$$ approaches, such as the use of quoted market$$ prices, market$$ comparables, or management assumptions and valuation models due to the unpredictability of the results.