Final answer:
The write-down due to impairment will cause a decrease in book value. This is because the impairment charge reduces the carrying value of the asset, reflecting a loss in future economic benefits but does not directly change revenue.
Step-by-step explanation:
The question 'The write-down due to impairment will cause a:' asks about the effect of asset impairment on a company's financial statements. In accounting, impairment occurs when the market value of an asset drops below its book value, indicating that the asset is not expected to generate future economic benefits equal to its current recorded value. When an impairment loss is recognized, it is recorded as an expense, which reduces the carrying amount (or book value) of the related asset on the balance sheet.
The correct answer to the question is b) Decrease in book value. This decrease is because the asset's carrying value is reduced by the impairment charge, corresponding to the diminished prospects of future economic benefit from the asset. It's important to note that impairment affects the balance sheet and the income statement, where an impairment loss is recorded as an expense, but it does not immediately affect revenue. Instead, it may indirectly influence future revenues if the impaired asset is critical to revenue-generating activities.