Decline in Sales and Net Income: Effects on Statement of Cash
Flow
The FASB, after adopting SFAS 142, noted future cash flow can be
predicted at a better economic future position. SFAS 142 allows for
managerial discretion and enables the company to have a significant
economic impact on the financial statements. The adoption of SFAS 142
has been quite challenging for manipulators of the statement of cash flow
to misrepresent the economic life of the same. SFAS 142 provides
contingent road map guidance for the statement of cash flow. Therefore,
it can be determined that there is an existing relationship between future
cash flow and goodwill impairment by creating greater use of the
company’s economic value (Lee, 2011).