On the ensuing pages, we list the case requirements and suggested solutions. One of the key objectives of this case is to stimulate critical thinking by soliciting students' opinions. Therefore, these solutions should not be considered an exhaustive list. There may be multiple “correct” answers depending on the underlying assumptions that students choose to make.

According to the codification, a long-lived asset shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The following are specific examples of such “triggering” events (FASB ASC 360-10-35-21):

Students may argue that both (a) and (c) apply. More specifically, the spiders' presence on the land seems to have significantly decreased its potential market price (Point a) and the land also seems to have been impaired as a result of the “adverse action” of the regulatory agency (Point c). Although these two points are likely...

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