Galaxy Sports Inc

Goodwill is considered impaired when the implied fair value of goodwill in a reporting unit of a company is less than its carrying amount, or book value, including any deferred income taxes. By qualitative factors, if the fair value is less than its book value (likelihood more than 50%), two step of the goodwill impairment test is necessary. According to ASC 350-20-35-2 and 3(A&B&D), if the company determines that it is not more likely than not that fair value is less than the book value, it does

Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.For the purposes of impairment testing, goodwill is allocated to each of the Group 's cash-generating units (CGUs), or groups of CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.If the recoverable amount of the CGU (or groups of CGUs) is less than the carrying amount of the CGU (or groups of CGUs), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups

How would you analyze possible synergies or other sources of value not reflected in Liedtke’s base assumption?

Where explain the concept of Intangible asset, which represents assets that absence of physical substance. Moreover, Goodwill represents an asset from which is expected future economic benefits, emerge from the acquisition of other assets or business combination. Another important point would be the impartments testing as refers ASC 350-20-35-28 where indicates that Goodwill of reporting unit must be tested for impairment annually. The test can be accomplished at any time in the fiscal year. In the case of different reporting unit, the impairment test could be at different times. This citation in the memorandum was provided incorrect (ASC 305-20-35-1 and 28) this encoding does not exist in FASB.

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

We will discuss whether the Company’s approach for testing goodwill for impairment after recognizing an impairment charge related to a long-lived asset group classified as held-and-used is appropriate. This issue pertains to whether it is feasible to have a long-lived asset impairment without goodwill impairment.

If their stock price dropped to ZERO, an impairment would not be required because they are comparing the market price of their stock to their carrying amount of stockholder’s equity, which in a deficit. Also, the Company is anticipating those assets to produce future benefits that exceed its costs.

Because $2.3 million is less than the Carrying Value of the asset group of $4.7 mm, ($2.3 million < $4.7 million), The Impairment loss will be Fair Value of Asset less carrying amount of asset group.

The authoritative guidance for asset impairment is to ensure that impairment is recorded and dealt with as depreciation. The scope of the standard is writing off of assets and depreciation. According to the guidance of 360-10-35, it address how long-lived assets that are intended to be held and used in an entity’s business shall be reviewed for impairment. The impairment loss can only be recognized if the carrying amount of a long-lived assets is not recoverable and

Mercury  Athletic  Footwear   Valuing  the  Opportunity   [Author]   CASE   ANALYSIS         Mercury  Athletic  Footwear     Table  of   Contents   1.   Is  Mercury  an  appropriate  target  for  AGI?   Why  or  why  not?  ............................  3   2.

There is little negative evidence that might support the need for a valuation allowance. Firstly, losses occurred consecutively from 1992 to 1994. “A cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome”(FASB 740-10-30-23). Thus, establishing valuation allowances can be justified if Packer, Inc can prove that its operation earning is volatile against unusual events and might incur significant loss. 2. Foreign Credit

Galaxy Skis is a high end manufacturer of Skis. The revolutionary technology Galaxy offers has made it the favourite of serious skiers. The company wants to expand both locally as well as internationally to raise additional capital. The organization will seek various aspects of capital increase, its purpose, and alternatives associated with analysing operational issues. One of the key factors surrounding the company’s operational issues are ensuring supply and hedging its prices. Finally, the financial feasibility of the company is evaluated to expand and determine whether Galaxy Ski would form a good addition to an investment portfolio given its future plans.

Property, plant and equipment represent 14% of the company’s total assets and remained about the same over the three-year period. Both of the identifiable intangible assets, and Goodwill accounts show a significant decreased. Intangible assets in 2012 was increased by about 10% but in compared to 2013 decreased by 28.6%. Goodwill have a similar decreased amount. In 2012, Goodwill show decreased by 2% and in 2013 show another decreased by 34.8%. The change was due to their intention to divest of the Cole Hann and Umbro businesses. As the notes stated, “As of May 31, 2012, Cole Hann had no goodwill or identifinite-lived intangible assets on the Company’s balance sheet, while Umbro had $70 million of goodwill and $164 million of trademark and other intangible assets.” (Nike 10 K, 2012)

AbuGhazaleh, Al-Hares, and Roberts (2011) indicate that International Accounting Standard (IAS) 36, Impairment of Assets, provides such an opportunity relative to recording goodwill impairment, which requires numerous discretionary choices by management. For example, when a business acquisition is made, any ensuing goodwill must be arbitrarily allocated to each of the acquiring entity’s cash generating units (CGUs) expected to benefit from that business combination. Then, goodwill associated with each CGU must be tested at least annually for impairment by comparing the recoverable amount of the CGU with its carrying value. A CGU’s recoverable amount represents the higher of the CGU’s fair value less the costs of disposal or its value in use, which is the present value of the cash flows expected from operating the CGU. If the CGU’s carrying value exceeds its recoverable amount, an

Continued use of current (fair) values is consistent with FASB’s and the IASB’s conceptual preference for the primacy of the balance sheet over the income statement. Fair value represents measurements related to the present. Historical cost represents measurements relating to the past. Current GAAP requirements for fair value measurement of select assets and liabilities hark back to the banking and Savings & Loan crisis of the 1980s. At that time, many financial institutions were paying higher interest on deposits than they were earning on long-term fixed-rate mortgage loans. The historical cost model, the prevailing measurement attribute under GAAP at that time, masked the problem by recognizing losses gradually through negative net interest income. The current value of the institutions’ assets was less than the current value of the liabilities, effectively making the institutions insolvent. The historical cost model obscured the problem due to the requirement of carrying assets at inflated cost figures. Therefore, transparency was greatly diminished. Existing fair value and mark-to-market requirements were developed over several decades to address specific market events or conditions as noted above. These standards were the result of an extensive due process, and their