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IFRS CH 12 - component of an operating segment where...

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IFRS – Impairment Impairment of Value: The table below shows the most important differences between US GAAP and IFRS for impairment – US GAAP IFRS (IAS No. 36) Recognition Impairment loss required when book value of asset exceeds the undiscounted sum of the asset’s estimated future cash flows Impairment loss required when as asset’s book value exceeds the higher of the asset’s value- in-use and fair value less costs to sell Measurement Impairment loss is the difference between book value and fair value Impairment loss if the difference between book value and the recoverable amount Subsequent reversal of loss Prohibited Required if the circumstances that caused the impairment are resolved
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IFRS – Impairment (cont) Impairment of Goodwill: Highlighted in the table below are the important differences between US GAAP & IFRS for the impairment of goodwill – US GAAP IFRS (IAS No. 36) Level of testing A “reporting unit” = segment or
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Unformatted text preview: component of an operating segment where discrete financial information is available A “cash generating unit (CGU)” = lowest level where goodwill is monitored by management; can’t be lower than a segment Measurement Two Steps: 1. Compare fair value to book value of reporting unit – there’s a loss if FV is less then BV 2. Impairment loss is the excess of BV over implied FV One Step: 1. Compare the recoverable amount of the CGU to book value – if recoverable amount is less, reduce goodwill first, then other assets. IFRS – Research & Development • R&D Expenses: – US GAAP requires all R&D expenses (but software development) to be expensed in the period incurred – IAS No. 38 divides this up – • Research expenses = expensed in period incurred • Development expenses = capitalized as an intangible asset (if they meet specific criteria)...
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