bchadwick

I’m trying to identify misclassified items that can affect the Operating Income. Did some deep thinking and this what I came up with.
Tangible assets can be impaired
Company X estimates a higher salvage value (assume straightline depr) on their fixed asset. Now their deprication expense will be understated and operating income will be overstated. Eventually this asset will be tested for impairment because their Current Value  Market Value. That impairment will be classified as a nonrecurring item therefore their operating income will look overstated.