25_Asset_Impairment - fair value as calculated in...

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Click to edit Master subtitle style Asset Impairment Accountancy 301 Professor Clifton Brown 25 December 1, 2010
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Asset impairment: GAAP vs.  IFRS Indications of Impairment Tangibles & definite- lived intangible assets Tested when impairment  indicators are present Tested annually or more  frequently if indicators are  present Goodwill & indefinite  -lived H + ´ • intangible assets
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Asset impairment: GAAP vs.  IFRS GAAP IFRS Method of Determining Impairment Two-step approach: 1. Recoverability test 2. Impairment test if not  recoverable One-step approach: 1. Impairment test
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Determining impairment: FCF PV(FCF) IFRS recognize  impairment, but not  GAAP C V C V C V CV = asset carrying value Neither IFRS nor  GAAP recognize  impairment Both IFRS and  GAAP recognize  impairment $
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Asset impairment: GAAP vs.  IFRS Calculation of Impairment GAAP IFRS Amount by which  carrying value exceeds 
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Unformatted text preview: fair value as calculated in accordance with FAS 157 Amount by which carrying value exceeds recoverable amount Recoverable amount = higher of: 1. Fair value less costs to sell 2. Value in use (discounted NCF) Asset impairment: GAAP vs. IFRS Reversal of impairment loss GAAP IFRS Prohibited for all assets Prohibited for goodwill Reversal allowed for other long-lived assets not to exceed the initial carrying amount adjusted for depreciation/amortizatio Accounting for intangible Internally developed intangibles Externally purchased intangibles Generally not recognized Recognized at acquisition cost Next class Monday, Dec 6 Statement of Cash Flows 1 Readings Revsine Chapter 4 (re-read part) Revisine Chapter 17 Case Horny Toad, Inc. Presentations Teams 3, 4 & 5 Write ups Thursday...
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25_Asset_Impairment - fair value as calculated in...

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