The document discusses impairment testing guidance and issues related to goodwill and long-lived assets. It provides an overview of SFAS 142 and SFAS 144, the accounting standards governing impairment testing of goodwill, indefinite-lived intangible assets, and long-lived assets. The document then examines key issues in impairment testing, including the timing of tests, methodology, and challenges in determining fair value and reconciling to market capitalization. It also provides an example of applying the two-step process for testing goodwill impairment.
The document discusses impairment accounting under US GAAP and IFRS, noting that while the concept is the same the details differ, with IFRS using a one-step discounted cash flow model and being more likely to result in impairment charges that can reverse, whereas US GAAP uses a two-step model where impairment is less likely but losses are larger and non-reversible. It also provides an overview of triggering events requiring impairment reviews and practical tips for CFOs around ensuring reasonable cash flow forecasts, discount rates, and terminal values in impairment assessments.
This document provides an overview of Accounting Standard 28 on impairment of assets. It discusses the applicability, objective, scope, key concepts, identification of impaired assets, determining the recoverable amount, recognition and measurement of impairment losses, treatment of cash generating units, reversing impairment losses, required disclosures, and transitional provisions. The standard aims to ensure that assets are not carried at more than their recoverable amount and that any impairment losses are recognized in the financial statements.
The document provides an overview of IAS 36 Impairment of Assets. Key points include:
1) IAS 36 provides guidance for determining when the carrying amount of an asset exceeds its recoverable amount and an impairment loss must be recognized. It excludes certain assets and requires annual impairment testing of goodwill and indefinite-lived intangible assets.
2) An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use.
3) Impairment losses are allocated first to reduce the carrying amount of goodwill allocated to
The document provides an overview of IAS 36 Impairment of Assets, including the standard's objective to ensure assets are reported at no more than their recoverable amount. It discusses identifying impaired assets, calculating recoverable amount, recognizing impairment losses, reversing impairments, and disclosure requirements. Examples are provided for testing assets and cash-generating units for impairment.
Based on the information provided, it does not appear that the criteria to classify assets as held for sale have been met for the troubled company. While a sale may be expected, there is no written or approved plan and significant uncertainties remain around obtaining approval and closing of any sale.
IAS 36 provides guidance on impairment of assets. An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount. A cash generating unit is the smallest identifiable group of assets that generates cash inflows independently of other assets. Impairment losses are first allocated to goodwill associated with the CGU, then proportionately to other assets in the CGU based on their carrying amounts.
The document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the applicability of the standard to different levels of enterprises based on their size. It describes the objective to identify impaired assets and ensure they are not carried at more than their recoverable amount. It also covers key aspects like computation of impairment loss, treatment, disclosures and transitional provisions.
The document discusses impairment accounting under US GAAP and IFRS, noting that while the concept is the same the details differ, with IFRS using a one-step discounted cash flow model and being more likely to result in impairment charges that can reverse, whereas US GAAP uses a two-step model where impairment is less likely but losses are larger and non-reversible. It also provides an overview of triggering events requiring impairment reviews and practical tips for CFOs around ensuring reasonable cash flow forecasts, discount rates, and terminal values in impairment assessments.
This document provides an overview of Accounting Standard 28 on impairment of assets. It discusses the applicability, objective, scope, key concepts, identification of impaired assets, determining the recoverable amount, recognition and measurement of impairment losses, treatment of cash generating units, reversing impairment losses, required disclosures, and transitional provisions. The standard aims to ensure that assets are not carried at more than their recoverable amount and that any impairment losses are recognized in the financial statements.
The document provides an overview of IAS 36 Impairment of Assets. Key points include:
1) IAS 36 provides guidance for determining when the carrying amount of an asset exceeds its recoverable amount and an impairment loss must be recognized. It excludes certain assets and requires annual impairment testing of goodwill and indefinite-lived intangible assets.
2) An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use.
3) Impairment losses are allocated first to reduce the carrying amount of goodwill allocated to
The document provides an overview of IAS 36 Impairment of Assets, including the standard's objective to ensure assets are reported at no more than their recoverable amount. It discusses identifying impaired assets, calculating recoverable amount, recognizing impairment losses, reversing impairments, and disclosure requirements. Examples are provided for testing assets and cash-generating units for impairment.
Based on the information provided, it does not appear that the criteria to classify assets as held for sale have been met for the troubled company. While a sale may be expected, there is no written or approved plan and significant uncertainties remain around obtaining approval and closing of any sale.
IAS 36 provides guidance on impairment of assets. An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount. A cash generating unit is the smallest identifiable group of assets that generates cash inflows independently of other assets. Impairment losses are first allocated to goodwill associated with the CGU, then proportionately to other assets in the CGU based on their carrying amounts.
The document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the applicability of the standard to different levels of enterprises based on their size. It describes the objective to identify impaired assets and ensure they are not carried at more than their recoverable amount. It also covers key aspects like computation of impairment loss, treatment, disclosures and transitional provisions.
Accounting Standard - 28 Impairment Of AssetsCA Jimmit Mehta
This document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the objective to ensure assets are carried at no more than their recoverable amount. The standard is applicable to companies listed or in the process of listing with a turnover over 50 crores from 2004, and all other enterprises from 2005. Assets should be tested for impairment if there are any internal or external indicators, such as obsolescence, declines in value or performance. The recoverable amount is the higher of an asset's net selling price or value in use, which is the present value of estimated future cash flows. Impairment losses must be accounted for when the recoverable amount is less than the carrying amount.
Financial statements are not perfectly reliable for investors due to several issues:
1. Inconsistencies between accounting standards like US GAAP and IFRS make comparisons difficult.
2. Estimates and judgments in financial reporting can be significantly inaccurate, even when made in good faith.
3. Managers have strong incentives to deliberately misrepresent financial statements through fraudulent reporting.
While standards boards are working to address issues like revenue recognition and fair value measurement, investors still need to carefully examine assumptions and estimates used in financial statements. Fraudulent reporting also continues to evolve in harder to detect ways like manipulating operations rather than direct reporting. Vigilance from investors remains important.
Accounting Issues In A Downturn April 2010Deirdrekiely
The document summarizes key Irish/UK accounting standards relating to tangible and intangible assets, impairment, investment properties, and leases. FRS 15 covers accounting for tangible fixed assets, including initial measurement, valuation, depreciation, and website development costs. FRS 10 and FRS 11 address accounting for goodwill, intangibles, and impairment reviews. SSAP 19 and 21 provide guidance on investment properties and lease accounting respectively. The presentation provides examples and definitions to explain application of the standards.
The document discusses India's migration to fair value accounting practices as outlined by International Financial Reporting Standards (IFRS). Key points include:
- Beginning in April 2011, company assets and liabilities will be valued at their current market value rather than original price under IFRS.
- Intangible assets like brands and customer relationships will appear on acquirer balance sheets. Composition of balance sheets will change.
- IFRS defines fair value and outlines its use for share-based payments, business combinations, financial instruments, and other standards.
- SPA Merchant Bankers provides valuation services to help clients comply with IFRS fair value requirements.
1. The gross and net book values of fixed assets at the beginning and end of the period, along with additions, disposals, and other movements.
2. The depreciation methods and rates used for each class of fixed asset.
3. The amount of borrowing costs capitalized during the period for qualifying assets.
4. Any changes to accounting estimates like useful lives or residual values that affect the calculation of depreciation.
This document provides an overview of key accounting concepts and standards for entrepreneurs. It addresses topics like debenture redemption funds, treatment of preliminary expenses, foreign exchange transactions, government grants, related party disclosures, lease accounting, earnings per share calculations, tax differences, and definitions of associates. The document is intended to help entrepreneurs and participants in entrepreneurship programs understand basic accounting principles.
Hi Everyone,
In this Powerpoint Presentation I have discussed about the Accounting Standard-10 on Property, Plant & Equipment issued by ICAI. I have covered all the major topics such as measurement of PPE, Depreciation(Which was previously covered under AS-6 now deleted), Initial Recognition, Subsequent Recognition etc.
The document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the applicability of the standard to different levels of enterprises based on their size. It describes the objective to identify impaired assets and ensure they are not carried at more than their recoverable amount. It also covers key aspects like computation of impairment loss, treatment, disclosures and transitional provisions.
This document provides an overview of Ind AS 38 on Intangible Assets. It discusses the objective and scope, key definitions, recognition and measurement criteria, disclosure requirements, and differences between Ind AS 38 and the previous Accounting Standard AS 26. Some of the key points covered include defining an intangible asset, the criteria for recognition of intangible assets, measurement at cost or revaluation model, amortization periods, impairment testing, and additional disclosures required under Ind AS 38.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
Ind AS 2 establishes the accounting treatment for inventory. It requires inventory to be measured at the lower of cost or net realizable value. Cost includes all costs of purchase, conversion, and other costs to bring inventory to its present location and condition. Companies must disclose their accounting policies for inventory valuation and provide details on inventory amounts, write-downs, and reversals in the financial statements. Certain biological assets, agricultural products, minerals, and broker-held commodities are exempt from the standard's requirements.
Corporate Reporting - MFRS116, IAS16 Property Plant and Equipment_PPEDayana Mastura FCCA CA
This document discusses MFRS116 - Property, Plant and Equipment. It defines PPE and outlines the standard's scope and exceptions. PPE must meet definitions of an asset to be recognized initially at cost. Subsequent measurement can be under the cost or revaluation model. The document explains initial and subsequent measurement, self-construction, exchanges, derecognition and disclosure requirements under MFRS116 for PPE.
This document summarizes Accounting Standard 10 on Property, Plant and Equipment. It describes the objectives, scope, definitions and accounting treatment for PPE. Key points include: the standard establishes principles for recognition, measurement, presentation and disclosure of PPE; assets qualifying as PPE must be held for use in production or supply of goods/services and have a useful life of more than one year; PPE is initially measured at cost and subsequently using either the cost or revaluation model; depreciation is charged over the useful life of an asset using methods like straight line or diminishing balance; and gains or losses on disposal of PPE are included in profit or loss.
This document discusses key aspects of the income statement, including:
- The income statement measures a company's success over a period of time. It provides information to evaluate past performance and predict future cash flows.
- Limitations include items that cannot be reliably measured and judgment in income measurements. Income can also be affected by accounting methods.
- Earnings management uses accounting techniques to paint an overly positive picture of a company's performance.
- The income statement includes income (revenues and gains) and expenses (expenses and losses). IFRS requires minimum disclosure of these elements.
- Formats include traditional and comprehensive, with the latter including other comprehensive income items affecting equity.
Summary of Ind AS 28 for the students and who are new to Ind AS. They can make a basic understanding about the words, definition, terms, provisions used in the actual Ind AS 28.
This presentation will also provide a year end update of the technical accounting standards (ASU’s), proposed standards that are in Exposure Drafts (ED’s), and the projects of the FASB going forward.
During the presentation attendees can expect to learn the following:
Gain an understanding of the most significant changes in accounting standards over the past 12 months
Become familiar with the proposed changes that the FASB has issued in Exposure Drafts
Acquire knowledge of the big projects that the FASB will address next
After this webinar attendees will be able to answer:
What changes has the FASB made over the past year?
How will these changes impact you and your organization?
What areas will the FASB focus on next?
This document summarizes the key aspects of IAS 36 regarding impairment of assets. IAS 36 aims to ensure assets are not carried at more than their recoverable amount. It defines terms like carrying amount, cash-generating units and impairment loss. The standard outlines how to identify impaired assets, measure recoverable amount, recognize impairment losses, allocate losses to cash-generating units including goodwill, and reverse impairment losses. Entities must disclose impairment losses, reversals and reasons for changes in carrying amounts.
This slideshow will introduce you to the unique co-pack process of Brooks Pepperfire Foods.
If you would like to download a copy of this presentation, contact me by email.
The document summarizes lessons learned from impairment testing in 2010 and beyond. It discusses recurring issues companies face with impairment testing such as whether to value the enterprise, total assets, or equity. It also covers common audit questions around reporting units and indefinite-lived assets. Specific case studies are presented on issues like deferred tax considerations, discount rates, and reconciling different valuation methodologies.
Accounting Standard - 28 Impairment Of AssetsCA Jimmit Mehta
This document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the objective to ensure assets are carried at no more than their recoverable amount. The standard is applicable to companies listed or in the process of listing with a turnover over 50 crores from 2004, and all other enterprises from 2005. Assets should be tested for impairment if there are any internal or external indicators, such as obsolescence, declines in value or performance. The recoverable amount is the higher of an asset's net selling price or value in use, which is the present value of estimated future cash flows. Impairment losses must be accounted for when the recoverable amount is less than the carrying amount.
Financial statements are not perfectly reliable for investors due to several issues:
1. Inconsistencies between accounting standards like US GAAP and IFRS make comparisons difficult.
2. Estimates and judgments in financial reporting can be significantly inaccurate, even when made in good faith.
3. Managers have strong incentives to deliberately misrepresent financial statements through fraudulent reporting.
While standards boards are working to address issues like revenue recognition and fair value measurement, investors still need to carefully examine assumptions and estimates used in financial statements. Fraudulent reporting also continues to evolve in harder to detect ways like manipulating operations rather than direct reporting. Vigilance from investors remains important.
Accounting Issues In A Downturn April 2010Deirdrekiely
The document summarizes key Irish/UK accounting standards relating to tangible and intangible assets, impairment, investment properties, and leases. FRS 15 covers accounting for tangible fixed assets, including initial measurement, valuation, depreciation, and website development costs. FRS 10 and FRS 11 address accounting for goodwill, intangibles, and impairment reviews. SSAP 19 and 21 provide guidance on investment properties and lease accounting respectively. The presentation provides examples and definitions to explain application of the standards.
The document discusses India's migration to fair value accounting practices as outlined by International Financial Reporting Standards (IFRS). Key points include:
- Beginning in April 2011, company assets and liabilities will be valued at their current market value rather than original price under IFRS.
- Intangible assets like brands and customer relationships will appear on acquirer balance sheets. Composition of balance sheets will change.
- IFRS defines fair value and outlines its use for share-based payments, business combinations, financial instruments, and other standards.
- SPA Merchant Bankers provides valuation services to help clients comply with IFRS fair value requirements.
1. The gross and net book values of fixed assets at the beginning and end of the period, along with additions, disposals, and other movements.
2. The depreciation methods and rates used for each class of fixed asset.
3. The amount of borrowing costs capitalized during the period for qualifying assets.
4. Any changes to accounting estimates like useful lives or residual values that affect the calculation of depreciation.
This document provides an overview of key accounting concepts and standards for entrepreneurs. It addresses topics like debenture redemption funds, treatment of preliminary expenses, foreign exchange transactions, government grants, related party disclosures, lease accounting, earnings per share calculations, tax differences, and definitions of associates. The document is intended to help entrepreneurs and participants in entrepreneurship programs understand basic accounting principles.
Hi Everyone,
In this Powerpoint Presentation I have discussed about the Accounting Standard-10 on Property, Plant & Equipment issued by ICAI. I have covered all the major topics such as measurement of PPE, Depreciation(Which was previously covered under AS-6 now deleted), Initial Recognition, Subsequent Recognition etc.
The document provides an overview of Accounting Standard 28 regarding impairment of assets. It outlines the applicability of the standard to different levels of enterprises based on their size. It describes the objective to identify impaired assets and ensure they are not carried at more than their recoverable amount. It also covers key aspects like computation of impairment loss, treatment, disclosures and transitional provisions.
This document provides an overview of Ind AS 38 on Intangible Assets. It discusses the objective and scope, key definitions, recognition and measurement criteria, disclosure requirements, and differences between Ind AS 38 and the previous Accounting Standard AS 26. Some of the key points covered include defining an intangible asset, the criteria for recognition of intangible assets, measurement at cost or revaluation model, amortization periods, impairment testing, and additional disclosures required under Ind AS 38.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
Ind AS 2 establishes the accounting treatment for inventory. It requires inventory to be measured at the lower of cost or net realizable value. Cost includes all costs of purchase, conversion, and other costs to bring inventory to its present location and condition. Companies must disclose their accounting policies for inventory valuation and provide details on inventory amounts, write-downs, and reversals in the financial statements. Certain biological assets, agricultural products, minerals, and broker-held commodities are exempt from the standard's requirements.
Corporate Reporting - MFRS116, IAS16 Property Plant and Equipment_PPEDayana Mastura FCCA CA
This document discusses MFRS116 - Property, Plant and Equipment. It defines PPE and outlines the standard's scope and exceptions. PPE must meet definitions of an asset to be recognized initially at cost. Subsequent measurement can be under the cost or revaluation model. The document explains initial and subsequent measurement, self-construction, exchanges, derecognition and disclosure requirements under MFRS116 for PPE.
This document summarizes Accounting Standard 10 on Property, Plant and Equipment. It describes the objectives, scope, definitions and accounting treatment for PPE. Key points include: the standard establishes principles for recognition, measurement, presentation and disclosure of PPE; assets qualifying as PPE must be held for use in production or supply of goods/services and have a useful life of more than one year; PPE is initially measured at cost and subsequently using either the cost or revaluation model; depreciation is charged over the useful life of an asset using methods like straight line or diminishing balance; and gains or losses on disposal of PPE are included in profit or loss.
This document discusses key aspects of the income statement, including:
- The income statement measures a company's success over a period of time. It provides information to evaluate past performance and predict future cash flows.
- Limitations include items that cannot be reliably measured and judgment in income measurements. Income can also be affected by accounting methods.
- Earnings management uses accounting techniques to paint an overly positive picture of a company's performance.
- The income statement includes income (revenues and gains) and expenses (expenses and losses). IFRS requires minimum disclosure of these elements.
- Formats include traditional and comprehensive, with the latter including other comprehensive income items affecting equity.
Summary of Ind AS 28 for the students and who are new to Ind AS. They can make a basic understanding about the words, definition, terms, provisions used in the actual Ind AS 28.
This presentation will also provide a year end update of the technical accounting standards (ASU’s), proposed standards that are in Exposure Drafts (ED’s), and the projects of the FASB going forward.
During the presentation attendees can expect to learn the following:
Gain an understanding of the most significant changes in accounting standards over the past 12 months
Become familiar with the proposed changes that the FASB has issued in Exposure Drafts
Acquire knowledge of the big projects that the FASB will address next
After this webinar attendees will be able to answer:
What changes has the FASB made over the past year?
How will these changes impact you and your organization?
What areas will the FASB focus on next?
This document summarizes the key aspects of IAS 36 regarding impairment of assets. IAS 36 aims to ensure assets are not carried at more than their recoverable amount. It defines terms like carrying amount, cash-generating units and impairment loss. The standard outlines how to identify impaired assets, measure recoverable amount, recognize impairment losses, allocate losses to cash-generating units including goodwill, and reverse impairment losses. Entities must disclose impairment losses, reversals and reasons for changes in carrying amounts.
This slideshow will introduce you to the unique co-pack process of Brooks Pepperfire Foods.
If you would like to download a copy of this presentation, contact me by email.
The document summarizes lessons learned from impairment testing in 2010 and beyond. It discusses recurring issues companies face with impairment testing such as whether to value the enterprise, total assets, or equity. It also covers common audit questions around reporting units and indefinite-lived assets. Specific case studies are presented on issues like deferred tax considerations, discount rates, and reconciling different valuation methodologies.
- Reassess identification of all assets and liabilities to ensure all were identified
- Review procedures used to measure amounts required to be recognized
- Consider if purchase price is significantly below value of tangible assets, working capital or other benchmarks
- If fair value of net assets exceeds consideration paid, it represents a bargain purchase requiring recognition of gain
Determining if a transaction meets the definition of a bargain purchase requires carefully reassessing the identification and measurement of all assets and liabilities to validate the excess fair value.
Valuation Research Corporation presented information on preparing for SFAS 141R. Key points include:
- VRC provides valuation advisory services and maintains relationships with corporations and financial institutions.
- SFAS 141R changes the accounting for business combinations from an asset-based approach to a fair value approach.
- Major changes in 141R include defining a business, accounting for contingent consideration and noncontrolling interests at fair value, and expensing acquisition-related costs.
- SFAS 141R aims to provide greater transparency through recognizing all assets acquired and liabilities assumed at fair value.
Este documento presenta la información sobre un curso de contabilidad incluyendo la ponderación de las evaluaciones, bibliografía, objetivos generales y específicos, definiciones de contabilidad y sus objetivos, y una explicación de los postulados básicos de las normas de información financiera que guían el reconocimiento contable.
This document discusses alternative approaches to valuing customer-related intangible assets, including qualitative considerations, the with-and-without approach, distributor method, and multi-period excess earnings method (MPEEM). The with-and-without approach values customer assets by quantifying the difference in cash flows with and without the customer assets. The distributor method values customer assets based on the profit margin of a comparable distributor. The MPEEM allocates earnings between contributory and non-contributory assets but may overstate customer value if another asset is primary. Qualitative factors must be considered to select the appropriate valuation technique.
1) In the late 19th century, women's suffrage activists like Elizabeth Cady Stanton, Susan B. Anthony, and Matilda Joslyn Gage fought for women's right to vote by organizing conventions and associations.
2) Susan B. Anthony was arrested in 1872 for attempting to vote and refusing to pay the fine to protest women's lack of voting rights.
3) The 19th amendment, granting women the right to vote, was ratified in 1920 after decades of activism and pressure from suffrage leaders like Stanton and Anthony.
Alternative Methods For Valuing Customer Relationships(11.15.12)pjpatel
Ed Hamilton and P.J. Patel are experts on valuing customer relationships for financial reporting. They will discuss alternative valuation methods including the multi-period excess earnings method, distributor method, and cost approach. Case studies will examine applying these methods to acquired companies with established customer bases. The appropriate valuation method depends on factors such as whether customers are the primary asset and assumptions needed.
This document discusses impairment testing requirements for goodwill, indefinite-lived intangible assets, and long-lived assets under US GAAP. It provides background on the structure of impairment testing, noting that indefinite-lived assets must be tested first, followed by long-lived assets, and finally goodwill. The order of operations for a single reporting unit example is outlined. The current economic environment has led to a significant increase in impairment charges for many companies as they apply these testing requirements.
Here are the key steps I would take to reconcile the fair value of the reporting units to the market capitalization:
1. Determine the fair value of each reporting unit using a discounted cash flow method. This would provide an indication of fair value at the reporting unit level without regard to market fluctuations.
2. Calculate the fair value of equity for the entire company based on the fair values determined for each reporting unit.
3. Reconcile the total fair value of equity to the market capitalization of the entire company. The difference could be due to control premium or market inefficiencies.
4. Allocate the reconciled fair value of equity to each reporting unit based on its relative fair value. This step ties
Strategic Investment Property Valuation: Optimizing Returns in Real EstateTanuj Kumar & Associates
Elevate your real estate investment game with strategic property valuation tactics. Explore innovative approaches to assessing property value, enhancing asset performance, and achieving long-term financial success.
iscover the key methodologies and tools essential for accurate investment property valuation. Maximize your ROI by understanding the intricacies of property valuation and make informed decisions that propel your investment portfolio forward.
This document outlines an audit presentation on receivables. It discusses why receivables and revenue represent significant audit risk due to financial fraud risks and complex accounting rules. It then lists the audit objectives for receivables and sales across various assertions like existence, completeness, and valuation. Finally, it outlines the primary substantive audit procedures that would be used, such as reconciling subsidiary ledgers to the general ledger, confirming receivables, and analyzing allowance accounts. It includes two illustrations, one calculating a bad debt expense adjustment and another discussing a percentage-of-completion construction contract.
This document outlines the key points of Statement of Financial Accounting Concepts No. 5 from the Financial Accounting Standards Board (FASB). Some of the main topics covered include:
- Recognition criteria for incorporating items into financial statements, including being definable, measurable, relevant, and reliably representational.
- The components that should be included in a full set of financial statements, such as statements of financial position, earnings, comprehensive income, cash flows, and investments/distributions.
- Guidance on recognizing revenues, expenses, gains and losses as components of earnings or comprehensive income. Items must be realized/realizable and earned to be included in earnings.
- Recognition and measurement of assets,
This document provides an overview of various accounting concepts related to financial accounting. It discusses accounting treatments for bad debts, methods for writing off bad debts such as direct write-off and provision methods. It also covers topics such as aging schedules, percentage of sales method, bad debt recovery, stock/inventory costing methods including FIFO, LIFO, weighted average. The document also discusses perpetual and periodic inventory systems, accounting for property, plant and equipment, depreciation methods, revaluation of assets, amortization of intangibles, depletion and more.
The document discusses accounting practices, metrics, and regulatory compliance matters for Airtel Accounting Practice. It includes benchmarks for productivity, profitability, cash flow, and risk/return. It outlines the organizational chart, accounting systems used, and types of management information reports. Finally, it details various regulatory compliance requirements around taxation, company law, meetings, minutes books, and general statutory filings.
Partner Janice Snyder discussed the recent changes made by the Financial Accounting Standards Board and how those changes will impact you and your organization.
This document outlines key aspects of financial statement analysis including the meaning and types of financial statements, methods of analysis such as ratio analysis, and the significance of financial statements. It discusses the main financial statements including the income statement, balance sheet, statement of cash flows, and statement of retained earnings. It also explains various types of ratios used in analysis like liquidity, asset management, debt, and profitability ratios and how they are calculated and used. The purpose of financial statement analysis is to evaluate a company's financial strength and performance.
This document provides a review of key concepts from an auditing textbook. It includes summaries of several chapters and sections related to auditing principles, standards, and procedures. The high-level information presented includes:
- The roles and responsibilities of auditors, management, and other parties in the auditing process.
- Assertions auditors make about transactions, accounts, and disclosures in financial statements.
- The concepts of materiality, audit risk, evidence, sampling, and issuing audit reports.
- Auditing standards set by organizations like the PCAOB and IAASB.
- Ethics requirements for auditors and the importance of independence.
- An overview of audit planning and types
International financial accounting standardsRaziya Hameed
International Accounting Standards were established in 1973 and were later replaced by International Financial Reporting Standards in 2001 to provide a common set of global accounting standards. IFRS are now accepted in over 120 countries and aim to increase transparency and comparability of financial information across international borders. The standards are set by the International Accounting Standards Board and cover key aspects of financial reporting such as accounting elements, qualitative characteristics, objectives, and underlying assumptions. While IFRS adoption has costs, there are significant benefits for international trade, investment and comparability between global companies.
This document presents a project work on ratio analysis as a tool for financial analysis. It discusses ratio analysis as a technique for evaluating a company's financial condition and performance by calculating and comparing various financial ratios. The document defines key terms related to ratio analysis and outlines its objectives and procedures. It also classifies common financial ratios into five main categories: leverage ratios, liquidity ratios, profitability ratios, turnover/asset utilization ratios, and valuation ratios. Examples of important ratios under each category are provided.
This presentation summarizes the major differences between Nepal Financial Reporting Standards and Nepal Rastra Bank (NRB) directives. The presentation was made on October 2015 to the CEO and Audit Committee members of commercial banks of Nepal in a joint program organized by central bank of Nepal and Institute of Chartered Accountants of Nepal.
The document discusses asset lifecycle management and outlines the four main stages: 1) procuring an asset, 2) enablement and calibration, 3) management and optimization, and 4) disposal and evaluation. It provides an overview of each stage in the lifecycle, highlighting key processes like determining requirements, setting specifications, integration, and accounting procedures. The overall asset lifecycle management strategy aims to obtain optimal productivity from assets and reduce costs to increase financial returns for a company.
The document discusses asset lifecycle management and outlines the four main stages: 1) procuring an asset, 2) enablement and calibration, 3) management and optimization, and 4) disposal and evaluation. It provides an overview of each stage in the lifecycle, highlighting key processes like determining requirements, setting specifications, integration, and accounting procedures. The overall asset lifecycle management strategy aims to obtain optimal productivity from assets and reduce costs to increase financial returns for a company.
An external audit assesses an entity's internal controls, procedures, governance and financial reporting. It is performed by independent external auditors and provides assurance to financial statement users. The audit ensures the financial statements accurately reflect the entity's financial position and comply with relevant standards and regulations. External auditors issue a report representing their opinion on whether the financial statements are fairly and accurately presented.
Financial statement analysis involves calculating ratios to evaluate a company's profitability, liquidity, asset use, financial stability, and market performance over time. It is more than just analyzing numbers - it requires understanding a company's industry, strategy, annual reports, economic conditions and more. For the Quorum Group, the investor should calculate relevant ratios such as profit margins, asset turnover, debt-to-equity, and compare trends over time to evaluate the company's financial performance and position for investment purposes.
Accounting is the process of measuring and recording financial transactions and preparing financial statements. The four main financial statements are the balance sheet, income statement, statement of owner's equity, and statement of cash flows. Ratio analysis uses ratios calculated from the financial statements to analyze a company's financial strengths and weaknesses. Budgets are financial plans that estimate revenues, expenses and cash flows and are used for planning and control. Globalization and the move toward international accounting standards aim to increase consistency in financial reporting worldwide.
Philip Lewis, Head of Accounting Product at Aptitude Software, presents his thoughts on the complexities and challenges involved in the implementation of IFRS 9 regulation for banks globally.
Similar to Sfas142 144 Presentation(02 23 09) (20)
1. Long Live the Asset!Long Live the Asset!
Impairment Testing in the
Current Environment
February 24, 2009
2. Valuation Research Corporation
• Formed in 1975, VRC has eight U.S. offices and eight international
affiliates.
• VRC provides M & A advisory services, fairness and solvency opinions in
support of corporate transactions, and valuations of intellectual property
and tangible assets for financial reporting and tax purposesand tangible assets for financial reporting and tax purposes.
• VRC maintains relationships with corporations, lenders, accountants,
investment banks, private equity firms, and law firms.
• VRC was instrumental in forming the Appraisal Issues Task Force (AITF), a
valuation industry group that meets quarterly to discuss financial reporting
related valuation issues.related valuation issues.
2Valuation Research CorporationValuation Research Corporation
3. P.J. Patel, CFA
• Mr. Patel specializes in the valuation of businesses, assets and
liabilities for financial reporting purposes. In particular, he has
focused on the valuation of intellectual property/intangible assets such
as trademarks, technology, software, customer relationships and
IPR&D. He also values business interests for tax purposes.
• Mr. Patel is an active member of the AITF and is currently a member of
the Appraisal Foundation Working Group preparing a Practice Aid for
the valuation of customer relationships.
• Mr. Patel is a frequent presenter on valuation issues for financial
reporting purposes and has recently presented on valuation issues
relating to SFAS No. 141/141R, SFAS No. 142/144, SFAS No. 157relating to SFAS No. 141/141R, SFAS No. 142/144, SFAS No. 157
and other emerging issues. Mr. Patel recently spoke at the AICPA SEC
conference in Washington D.C.
3Valuation Research CorporationValuation Research Corporation
4. Edward Hamilton
• Mr. Hamilton specializes in the valuation of businesses, assets
and liabilities for financial reporting purposes. In particular, he has
focused on the valuation of intellectual property/intangible assets such as
trademarks, technology, software, customer relationships and IPR&D. He
also values business interests for tax purposes.
• Mr. Hamilton is an active member of the AITF and is currently involved with
the Appraisal Foundation Working Group preparing a Practice Aid for the
valuation of customer relationships.
• Mr. Hamilton is a frequent presenter on valuation issues for financial
reporting purposes and has recently presented on valuation issues relating
to SFAS No. 141/141R, SFAS No. 142/144, SFAS No. 157to SFAS No. 141/141R, SFAS No. 142/144, SFAS No. 157
and other emerging issues.
4Valuation Research CorporationValuation Research Corporation
5. Agenda – Issues in Accounting For Asset Impairment
• Guidance
• SFAS 142: Goodwill and Other Intangible Assets
• Goodwill Testing Consists of Two Stepsg p
• Comparison of the Fair Value of the Reporting Unit to its Carrying Value
• Recognition of an Impairment Amount
• SFAS 144: Accounting for the Impairment of Long-Lived Assets
• Timing/Triggering Events
• Determining Asset Groups
• Determining the Primary Asset
T ti f R bilit• Testing for Recoverability
• Allocating Impairment
• Impairment Testing Order
C l i P tti It All T th• Conclusion: Putting It All Together
5Valuation Research CorporationValuation Research Corporation
6. Sources of Information
Statement/EITF Issue
SFAS 142 The testing and impairment of goodwill and indefinite-
lived intangibles
SFAS 144 The testing and impairment of long-lived tangible and
i t ibl tintangible assets
SFAS 157 Guidance on fair value measurements
EITF 02 7 Unit of accounting for the impairment testing ofEITF 02-7 Unit of accounting for the impairment testing of
indefinite-lived intangible assets
EITF 02-13 Treatment of deferred income taxes in goodwill
impairment testingimpairment testing
2008 SEC
Speeches
Inclusion of a control premium
Market cap reconciliation
Interim impairment testing indicators
6Valuation Research Corporation
7. Summary of Impairment Testing
Accounting
Guidance
SFAS 142 SFAS 144
A t T G d ill I d fi it Li d L Li dAsset Type Goodwill Indefinite-Lived
Intangible Assets
Long-Lived
Tangible &
Intangible Assets
Focus Goodwill carried at
lower of FV or CV
Indefinite-lived
intangible assets
carried at lower of
FV or CV
Test the
recoverability of
long-lived assets
& allocateFV or CV & allocate
impairment
Methodology Two step One step Multiple steps
Frequency Annually/event Annually/event Event basedFrequency Annually/event
based
Annually/event
based
Event based
7Valuation Research CorporationValuation Research Corporation
8. Impairment Testing
• Goodwill under SFAS 142
f S S• Indefinite-Lived Assets under SFAS 142
• Long-Lived Assets under SFAS 144
8Valuation Research Corporation
9. Goodwill Impairment Testing - Issues
• When to Test?
• Testing Methodology• Testing Methodology
• Current Issues
9Valuation Research Corporation
10. When to Test for Goodwill Impairment?
• Paragraph 26 states that goodwill should be tested for impairment annually
or more frequently
• Paragraph 28 notes several events/circumstances causing goodwill to beg p g g
tested between annual test dates:
a) Significant adverse change in legal factors or in the business climate.
b) An adverse action or assessment by a regulatorb) An adverse action or assessment by a regulator
c) Unanticipated competition
d) A loss of key personnel
e) A more-likely-than-not expectation that a reporting unit or a significant portion of) y g g
a reporting unit will be sold or otherwise disposed of
f) The testing for recoverability under Statement 144 a significant asset group
within a reporting unit
g) Recognition of a goodwill impairment loss in the financial statements of ag) Recognition of a goodwill impairment loss in the financial statements of a
subsidiary that is a component of a reporting unit.
10Valuation Research Corporation
11. When to Test for Goodwill Impairment?
Issues:
• Can I carry forward the reporting unit’s fair value per Paragraph 27?
• What if the market capitalization drops below the book value of equity?p p q y
• What if the book value of equity is negative?
11Valuation Research Corporation
12. Step 1: Does Goodwill Impairment Exist?
• Paragraph 19 of SFAS 142 outlines step 1 of goodwill impairment
testing
St 1 i d t id tif t ti l i i t• Step 1, is used to identify potential impairment
• If the fair value is greater than the carrying value, the reporting unit is
not impaired
• If the fair value is less than the carrying value, proceed to step 2 to
determine the level of impairment loss, if any
12Valuation Research Corporation
13. Step 1: Does Goodwill Impairment Exist?
Issues:
• What is the appropriate level to calculate the fair value of the reporting unit?
Enterprise Value, Total Assets, Equity?p , , q y
• Reconciling to the market cap?
• Estimation of a control premium? Mergerstat studies generally point to
control premiums ranging between 20-30%. However, the range of control
premiums is significant.
• SEC – No bright lines. Do a supportable valuation with sufficient analysis
to support position, especially if control premiums are significant.
N ifi d t f d t t d t i t l i• No specific date or range of dates to determine control premium.
• If using an income approach, has the discount rate changed due to increased
risk and/or an increased cost of debt? Increased scrutiny should be applied
when determining the WACC using market participant inputswhen determining the WACC using market participant inputs
13Valuation Research Corporation
14. Step 1: Reconciling to the Market Cap
Your company has two reporting units that get tested annually for goodwill
impairment as of 9/30. Recently, your market capitalization has dropped below your
book value of equity. In light of this and current economic conditions you complete an
interim test for goodwill impairment as of 12/31/08. Reporting Unit 1 (RU1) has ag p p g ( )
carrying value of $350 while Reporting Unit 2 (RU2) has a carrying value of $400.
The market capitalization of the company is $700 and there is no debt. The table
below summarizes the value conclusions.
Reporting Unit Fair Value Carrying Value Conclusion
RU1 $500 $350 No impairment
RU2 $300 $400 Impairment indicatedRU2 $300 $400 Impairment indicated,
proceed to step 2
Total $800 $750
Market Cap $700Market Cap $700
Implied Control Premium 14.3%
14Valuation Research Corporation
15. Step 2: Determine Implied Fair Value of Goodwill
• Paragraphs 20 & 21 of SFAS 142 outline step 2 methodology
• Steps
• SFAS 141 purchase price allocation
• Fair value of reporting unit equivalent to purchase price in a 141
• Allocate to fair value of all assets/liabilities (even if the assets/liabilities are not on
the books of the reporting unit)
• The allocation process is performed only for the purpose of testing goodwill forThe allocation process is performed only for the purpose of testing goodwill for
impairment; an entity should not write up or write down a recognized asset or liability,
nor should it recognize a previously unrecognized intangible asset as a result of that
allocation process.
• The fair value of the goodwill is equal to the residualg q
• The level of goodwill impairment is equal to the difference between the fair value
of goodwill and the book value of goodwill.
• After a goodwill impairment loss is recognized, the adjusted carrying amount
of goodwill shall be its new accounting basis Subsequent reversal of aof goodwill shall be its new accounting basis. Subsequent reversal of a
previously recognized goodwill impairment loss is prohibited once the
measurement of that loss is completed.
15Valuation Research Corporation
16. Step 2: Determining the Level of Goodwill Impairment
• Reporting Unit 2 failed step 1 test
• Fair value = $300
• Carrying value = $400
A f thi l th t b k l f PP&E d i t ibl t• Assume for this example that book value of PP&E and intangible assets are a
reasonable of estimate fair value.
Reporting Unit 2 Book Value Fair Value Impairment
Net Assets $400 $300
Working Capital 70 70
PP&E 50 50
Intangibles 120 130
Goodwill 160 50 110Goodwill 160 50 110
16Valuation Research Corporation
17. Impairment Testing
• Goodwill under SFAS 142
• Indefinite-Lived Assets under SFAS 142
• Long-Lived Assets under SFAS 144
17Valuation Research Corporation
18. Intangible Assets Not Subject to Amortization
• Guidance is in SFAS 142, paragraph 17
• Testing is annual with event based testingTesting is annual with event based testing
• Largely consists of trademarks/brands, certain licenses
• Test compares fair value to carrying value
If f i l i l th th i l th diff i th• If fair value is less than the carrying value, the difference is the
impairment amount
• Subsequent reversal is prohibited
18Valuation Research Corporation
19. When to Test Indefinite-Lived Intangibles
• Indefinite-lived intangibles are tested for impairment annually or due to an
event consistent with paragraph of SFAS 144.
• The following are examples of such events or changes in circumstances:The following are examples of such events or changes in circumstances:
a. A significant decrease in the market price of a long-lived asset (asset group)
b. A significant adverse change in the extent or manner in which a long-lived asset
(asset group) is being used or in its physical condition
c. A significant adverse change in legal factors or in the business climate that could
affect the value of a long-lived asset (asset group), including an adverse action
or assessment by a regulator
d. An accumulation of costs significantly in excess of the amount originally expectedg y g y p
for the acquisition or construction of a long-lived asset (asset group)
e. A current-period operating or cash flow loss combined with a history of operating
or cash flow losses or a projection or forecast that demonstrates continuing
losses associated with the use of a long-lived asset (asset group)losses associated with the use of a long lived asset (asset group)
f. A current expectation that, more likely than not, a long-lived asset (asset group)
will be sold or otherwise disposed of significantly before the end of its previously
estimated useful life.
19Valuation Research Corporation
20. When to Test Indefinite-Lived Intangibles
Issues:
• Can I carry forward the fair value from one year to the next ?
• What if I plan on phasing out the trademark?What if I plan on phasing out the trademark?
20Valuation Research Corporation
21. Indefinite-Lived Intangibles: Impairment Testing
Your company has 2 indefinite-lived trademarks that get tested annually for goodwill
impairment as of 9/30. Recently, your market capitalization has dropped below your
book value of equity. In light of this and current economic conditions you complete an
interim test for impairment as of 12/31/08 Trademark 1 has a carrying value of $35interim test for impairment as of 12/31/08. Trademark 1 has a carrying value of $35
while Trademark 2 has a carrying value of $45. The table below summarizes the
value conclusions.
Fair Value Carrying
Value
Difference Conclusion
Trademark 1 $40 $35 $5 No impairment
Trademark 2 $40 $45 ($5) Impairment,
write down
asset b $5asset by $5
21Valuation Research Corporation
22. Impairment Testing
• Goodwill under SFAS 142
• Indefinite-Lived Assets under SFAS 142
• Long-Lived Assets under SFAS 144
22Valuation Research Corporation
23. When to Test Long-Lived Assets for Impairment
• A long-lived asset (asset group) shall be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be recoverable.
The following are examples of such events or changes in circumstances:
a. A significant decrease in the market price of a long-lived asset (asset group)
b. A significant adverse change in the extent or manner in which a long-lived asset (asset group)
is being used or in its physical condition
c. A significant adverse change in legal factors or in the business climate that could affect the
l f l li d t ( t ) i l di d ti t bvalue of a long-lived asset (asset group), including an adverse action or assessment by a
regulator
d. An accumulation of costs significantly in excess of the amount originally expected for the
acquisition or construction of a long-lived asset (asset group)
e A current period operating or cash flow loss combined with a history of operating or cash flowe. A current-period operating or cash flow loss combined with a history of operating or cash flow
losses or a projection or forecast that demonstrates continuing losses associated with the
use of a long-lived asset (asset group)
f. A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or
otherwise disposed of significantly before the end of its previously estimated useful life.p g y p y
23Valuation Research Corporation
24. Long-Lived Asset Impairment – Asset Grouping
• Assets are grouped at the lowest level for which identifiable cash
flows are largely independent.
• Likely consists of working capital fixed assets intangible assetsLikely consists of working capital, fixed assets, intangible assets
• Asset group does not include goodwill unless the asset group is also
a reporting unit.
Company
Reporting
Unit 1
Asset
Reporting Unit 2
Asset Asset Asset
• Issue: How to determine asset groups?
Asset
Group
Asset
Group 1
Asset
Group 2
Asset
Group 3
24Valuation Research Corporation
25. Step 1: Recoverability Test
Step 1: Test for recoverability
• The carrying value of the asset group is compared to the sum of
undiscounted cash flows.
• Cash flows are projected over the remaining useful life (depreciable or
amortizable life) of the primary asset of the asset group.
• “Only the future cash flows… that are directly associated with and that
t d t i di t lt f th d t lare expected to arise as a direct result of the use and eventual
disposition of the asset (asset group). “
• Excludes interest and, per recent guidance from several leading firms,
taxes.taxes.
• Entity uses its own assumptions of asset use and should consider all
available information.
IIssues:
• If I am using an asset at less than its full potential does that mean its
impaired?
Is there a limitation on the life for purposes of determining the fair value of• Is there a limitation on the life for purposes of determining the fair value of
the asset group?
25Valuation Research Corporation
26. Step 1: Recoverability Test
Your company has 3 asset groups within reporting unit 2. In light of current
economic conditions you test your asset groups for impairment as of
12/31/08. The table below summarizes the value conclusions.
Reporting
Unit
Undiscounted
Cash flow
Carrying
Value
Conclusion
Asset Group 1 $60 $50 No impairment
Asset Group 2 $70 $130 Impairment indicated,
proceed to fair value testp
Asset Group 3 $30 $60 Impairment indicated,
proceed to fair value test
Total $160 $240Total $160 $240
Goodwill $160 Unallocated as the asset
groups are components of
the reporting unit
26Valuation Research Corporation
p g
27. Step 2: Determine Fair Value and Allocate Impairment
• The asset group is impaired by the amount its carrying value
exceeds its fair valueexceeds its fair value.
• The impairment is allocated, on a pro-rata basis to the assets
group’s long-lived assets.
• An asset cannot be impaired lower than its fair value• An asset cannot be impaired lower than its fair value.
27Valuation Research Corporation
28. Step 1b: Fair Value Test
The next step is to calculate the fair value of the asset groups that failed the
undiscounted cash flow test.
Reporting Unit Undisc Fair Value Carrying ConclusionReporting Unit Undisc.
Cash flow
Fair Value Carrying
Value
Conclusion
Asset Group 1 $60 $100 $50 No Impairment
Asset Group 2 $70 $150 $130 No Impairment
Asset Group 3 $30 $50 $60 Impairment indicated,
proceed to step 2proceed to step 2
Total $160 $300 $190
Goodwill $160 Unallocated as the asset
groups are components ofg oups a e co po e s o
the Reporting Unit
28Valuation Research Corporation
29. Step 2: Determine the Level of Asset Impairment
The next step is to calculate the fair value of the asset groups that failed the
undiscounted cash flow test. Asset Group 3 is showing impairment of $10.
Asset Group 3 Book
Value
% of
Total
Fair
Value
Pro –Rata
Allocation
Allocation of
impairment
Adjusted
Book
Value
Working Capital $10 n/a 0 0 $10
Fixed Assets 20 40% 18 4 2 18
Customer
relationships
10 20% 12 2 0 10
Technology 20 40% 7 4 8 12
Total 60 10 10 50
29Valuation Research Corporation
30. Priority
144.13. Other than goodwill, the carrying amounts of any assets (such as accounts
receivable and inventory) and liabilities (such as accounts payable, long term debt,
and asset retirement obligations) not covered by this Statement that are included in
an asset group shall be adjusted in accordance with other applicable generallyg p j pp g y
accepted accounting principles prior to testing the asset group for recoverability.
142.29. If goodwill and another asset (or asset group) of a reporting unit are tested for
impairment at the same time the other asset (or asset group) shall be tested forimpairment at the same time, the other asset (or asset group) shall be tested for
impairment before goodwill. For example, if a significant asset group is to be tested
for impairment under Statement 144 (thus potentially requiring a goodwill impairment
test), the impairment test for the significant asset group would be performed before
the goodwill impairment test If the asset group was impaired the impairment lossthe goodwill impairment test. If the asset group was impaired, the impairment loss
would be recognized prior to goodwill being tested for impairment.
• Indefinite-Lived Assets under SFAS 142
• Long-Lived Assets under SFAS 144
• Goodwill under SFAS 142
30Valuation Research Corporation
31. Conclusions: Putting It All Together
• Reporting Unit 2 failed step 1 test
• Fair value = $300
• Carrying value = $400
I i t f i d fi it li d t f $5• Impairment of an indefinite-lived asset of $5
• Impairment of long-lived assets of $10
Reporting Fair Carrying Asset Adjusted Conclusiong
Unit Value
y g
Value Impairment
j
Carrying
Value
RU1 $500 $350 0 $350 No Impairment
RU2 $300 $400 $15 $385 Impairment still
indicated,
proceed to step 2
Total $800 $750Total $800 $750
Market cap $700
Implied Control
Premium
14.3%
31Valuation Research Corporation
Premium
32. Conclusion: Putting It All Together
• Reporting Unit 2 failed step 1 test
• Fair Value = $300
• Carrying Value = $400; Adjusted Carrying Value = $385
A f thi l th t b k l f PP&E d i t ibl t• Assume for this example that book value of PP&E and intangible assets are a
reasonably estimate of fair value.
R ti U it 2 B k V l Adj t d F i V l 142/144Reporting Unit 2 Book Value Adjusted
Carrying
Value
Fair Value 142/144
Impairment
Net Assets $400 $385 $300$400 $385 $300
Working Capital 70 70 70
PP&E 50 48 50 2
I t ibl 120 107 130 13Intangibles 120 107 130 13
Goodwill 160 160 50 110
Total Impairment 125
32Valuation Research Corporation
33. Summary & Order of Impairment Testing
Asset Type Indefinite-lived
Intangible Assets
Long-lived
Tangible &
Intangible Assets
Goodwill
Intangible Assets
Accounting
Guidance
SFAS 142 SFAS 144 SFAS 142
Focus Indefinite-lived
Intangible assets
carried at lower of FV
Test the
recoverability of
long lived assets
Goodwill carried at
lower of FV or CV
carried at lower of FV
or CV
long-lived assets
Methodology One step Multiple steps Two step
Frequency Annually/event based Event based Annually/event basedFrequency Annually/event based Event based Annually/event based
33Valuation Research CorporationValuation Research Corporation
35. U.S. Office Locations
Boston
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Boston, MA 02110
Milwaukee
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San Francisco
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,
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813-463-8510
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513.579.9100
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609.452.0900
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36. International Affiliate Office Locations
Buenos Aires
Franklin D. Roosevelt 2445
Piso 10
London
Cloister House
Riverside
Monterrey
Antonio Gaona No. 2000-401
Col. Florida
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Venezuela
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