class 5 slides final

class 5 slides final - RSM321 Class 5 Testing Long-Lived...

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 1 Fall 2010 Advanced Financial Accounting RSM 321 Class 5: Testing Long-Lived Assets for Impairment; Case Studies Introduction (Planet Publishing)
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 2 Testing Long-Lived Assets for Impairment In 2011, unless adopted earlier, IAS 36: Impairment of Assets, will apply to the valuation of all assets unless specifically excluded in another standard Assets are required to be carried at no more than their recoverable amount An asset, or a group of similar assets (i.e. a “cash- generating unit”), should be written down if its carrying amount exceeds the amount to be recovered through use or sale of the assets This write-down is an “impairment loss” to be reported in net income (unless the asset has previously been reflected at a revalued amount)
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 3 Testing Long-Lived Assets for Impairment Recoverable amount is the higher of (i) fair value less costs to sell and (ii) value in use If either (i) or (ii) exceeds carrying amount then the asset is not impaired and the other value need not be determined If there is no available market for the asset it may be difficult to determine (i), in which case the value from (ii) is acceptable for recoverable amount
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 4 Testing Long-Lived Assets for Impairment IAS 36 establishes different rules and procedures for impairment testing for each of the following types of intangible assets: Intangible assets with definite useful lives Intangible assets with indefinite useful lives or not yet available for use Goodwill
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 5 Intangible Assets with Definite Useful  Lives The recoverable amount needs to be determined only if there is an indication of impairment. At a minimum the following factors should be considered:
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 6 Intangible Assets with Indefinite Useful Lives Indefinite-life intangible assets are not amortized
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This note was uploaded on 05/09/2011 for the course RSM 323 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto.

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class 5 slides final - RSM321 Class 5 Testing Long-Lived...

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