Briefly discuss the cost savings that may result from a private company electing to amortize goodwill as opposed to annual impairment testing.
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Briefly discuss the cost savings that may result from a private company electing to amortize
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- Which of the following statements regarding IFRS impairment testing for goodwill is false? Group of answer choices The firm can perform the fair value measurement for each cash-generating unit at any time during the fiscal year, as long as it uses the measurement date consistently. If the impairment loss is greater than the book value of goodwill, the cash-generating unit proportionally reduces the carrying value of other assets. IFRS requires an impairment test for goodwill whenever there are significant impairment indicators. The firm reports an impairment loss when the recoverable amount of the cash-generating unit is less than the carrying value of the cash-generating unit, including goodwill.An entity is committed to a plan to sell a manufacturing facility in its present condition and classifies the facility as held for sale at that date. After a firm purchase commitment is obtained, the buyer's inspection of the property identifies environmental damage not previously known to exist. The entity is required by the buyer to make good the damage, which will extend the period required to complete the sale beyond one year. However, the entity has initiated actions to make good the damage, and satisfactory rectification of the damage is highly probable. The manufacturing facility has a carrying amount of P10,000,000 and fair value less costs to sell of $10,600,000. How should the entity classify the manufacturing facility? a. Held for sale, 10.6Mb. Held for sale, 10M c. PPE, 10Md. PPE, 10.6MWhat is the difference in the treatment of internally generated goodwill from the purchased goodwill under IAS 38 intangible assets? Purchased goodwill is not amortised; whereas, internally generated goodwill can be amortised over a period of 10 years Purchased goodwill is to be expensed in the period it is bought, whereas internally generated goodwill is to be deferred and amortised over a period of no less than 20 years Purchased goodwill may be recorded as an asset, whereas internally generated goodwill may not Purchased goodwill can be amortised over a period of 10 years; whereas, internally generated goodwill is recognised as an asset which cannot be amortised
- Provisions shall be recognized for all of the following, except a. Restructuring costs after a binding sale agreement had been signed b. Future refurbishment costs due to introduction of a new computer system c. Rectificationcosts relating to defective products sold d. Cleaning-up costs of contaminated land when an oil entity has a published policy that it will undertake to clean up all contamination that it causesABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method.In reference to the determination of goodwill impairment, which of the following statements is correct? Question 2Answer a. The goodwill impairment test under ASC 350-20-35 is a three-step process. b. Under FASB, firms must first compare carrying values (book values) at the headquarter level. c. Firms can reverse previously recognized impairment losses. d. If the reporting unit's fair value exceeds its carrying value, goodwill is unimpaired.
- When an independent valuation expert advises an entity that the salvage value of its plant and machinery had drastically changed and thus the change is material, the entity should (a) Retrospectively change the depreciation charge based on the revised salvage value. (b) Change the depreciation charge and treat it as a correction of an error. (c) Change the annual depreciation for the current year and future years. (d) Ignore the effect of the change on annual depreciation, because changes in salvage values would normally affect the future only since these are expected to be recovered in future.Assume that a company buys another business and pays for its goodwill. If the company plans to incur costs each year to maintain the value of the goodwill, must it also amortize this goodwill?The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. options : both statement false first statement true and second statement false fisrt statement false and second statement ttrue . both sttament true
- If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as a. research and development expense in the period(s) of construction. b. depreciation deducted as part of research and development costs. c. depreciation or immediate write-off depending on company policy. d. an expense at such time as productive research and development has been obtained from the facility.Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.IFRS requires annual reviews of long-lived assets (other than goodwill) for reversal indicators. A loss may be reversed up to the newly estimated recoverable amount, not to exceed the initial carrying amount adjusted for depreciation. This is a significant departure from GAAP, so what are the financial statement implications? Is it a good thing or bad?
