When Should Companies Undertake An Impairment Test?

1952 Words Sep 10th, 2014 8 Pages
Table of contents
ABSTRACT 2
1. WHEN SHOULD COMPANIES UNDERTAKE AN IMPAIRMENT TEST? 2
2. THE CAUSE OF THE IMPAIRMENT 3
3. THE EFFECT ON CASH FLOW, BALANCE SHEET AND FINANCIAL PERFORMANCE – THE REASON TO PREFER A DEBT RATIO OF 15% 4
4. THE EFFECT ON STRATEGIC DECISION MAKING – WHY AND FROM WHOM NCM “UNDER PRESSURE” TO CONDUCT A CAPITAL RAISING 5
5. IS THE IMPAIRMENT MATERIALS? – ADDITIONAL DISCLOSURE REQUIREMENT SHOULD APPLY 6
REFERENCES 7 Abstract
Newcrest Ltd (NCM Ltd) is one of the largest gold mining companies in the world. It focuses on long-term value creation by maintaining low costs, growing reserves and production and using capital efficiently. (NCM, 2014) In the current financial year, the company is reviewing its carrying amount of all assets according to the cost and economic assumptions used. (NCM, 2014) Therefore, the revaluation of assets and impairment should consider.

The essays is focus on the impairment of assets and show the comprehension of apply the framework, in terms of impairment, on the NCM Ltd. The first part of the essay gives explanations of an impairment test and shows when should undertake the test. Secondly, the cause of the impairment will be analyzed based on the NCM Ltd. Thirdly, the effect on cash flow, balance sheet and financial performance will introduce. And it will explain the reason for NCM prefers to have a debt ratio of 15%. And then, how the impairment of assets affect the strategic decision making in NCM Ltd will explain.…

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