Impairment+and+pre+2011+GAAP+completed+outline

Impairment+and+pre+2011+GAAP+completed+outline - Impairment...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Impairment Impairment Investments must be reviewed for possible impairment to ensure that future benefit justifies the valuation on the balance sheet There are three different impairment models: Incurred loss Expected loss Fair value loss
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Impairment: Incurred Loss Model Impairment: Incurred Loss Model Impairment test carried out only if there is evidence of possible impairment Indicators of possible impairment include: Significant financial difficulties Defaulting on interest/principal payments Major financial reorganization or bankruptcy Impairment loss is recognized in net income as difference between carrying amount and revised present value of expected cash flows Revised present value is calculated using discounted cash flow (DCF) model (using either historic or current market rate as discount rate)
Background image of page 2
3 Impairment: Expected Loss Model Impairment: Expected Loss Model Impairment test carried out continuously Impairment loss is recognized in net income as difference between carrying amount and revised present value of expected cash flows Revised present value is calculated using discounted cash flow (DCF) model (using effective interest rate from time of acquisition)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/16/2011 for the course ACTG 3P33 taught by Professor N-a during the Fall '08 term at Brock University, Canada.

Page1 / 12

Impairment+and+pre+2011+GAAP+completed+outline - Impairment...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online