Impairment of Assets

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FASB 144 Impairment of Assets Assets held for use Includes land, building, equipment, natural resources, and intangible assets FASB 147 specifies that intangibles from the banking industry are covered by FASB 144 rules: Long-term customer relationship assets such as Depositor-relationships intangible assets Borrower-relationships intangible assets Credit card holder Intangible assets When should impairment be recognized? Testing each asset each period would be too costly Events or changes in circumstances indicate that its carrying amount may not be recoverable TRIGGERING EVENTS:…show more content…
Management commits to a plan to sell the asset 2. Asset is available for immediate sale in its present condition 3. Active program to locate a buyer has been initiated 4. Sale is probable within one year 5. Asset is being actively marketed for a reasonable price 6. It is unlikely that the plan to sell will be changed Measurement Write asset down to the LOWER of Carrying amount Fair value less cost to sell (see definitions below) Stop depreciating the asset Costs to sell Includes incremental direct costs to transact the sale Broker commissions Legal & title transfer fees Closing costs Generally does not include costs to protect or maintain asset Insurance Security

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