In 20X3, an impairment charge of $10 million is taken by a company on a depreciate asset.Most likely, the outcome will be:Increase 20X4's reported net income.As a result of the impairment write down in 20X3, 20X4's depreciation expense will be lower, leading to an increase in 20X4's EBIT and net income.
What exactly is EBIT?
A common indicator of a company's operational profitability is its earnings before interest and taxes (EBIT).EBIT stands for earnings before interest and taxes on debt, as its name suggests.Although they are both actual cash expenses, the company's core business operations do not directly generate them.
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