Describe how an assets impairment loss is determined and explain how IAS 36 deals with the recognition and measurement of the impairment of assets with reference to academic literature
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You are required to:
Describe how an assets impairment loss is determined and explain how IAS 36 deals with the recognition and measurement of the impairment of assets with reference to academic literature
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- You are conducting an accounting research project for your manager. Your manager has asked you to determine the appropriate U.S. GAAP that specifies how your company should recognize and value a newly purchased piece of equipment on the company's balance sheet. Your manager also wants you to determine the GAAP guidance for how the equipment should be depreciated. Your manager has a lot of knowledge and experience in accounting, and has heard about, but has never used. Directions Use the FASB Accounting Standards Codification system to conduct the research your manager has assigned to you. Use the Codification to determine how to recognize, value, and depreciate a piece of equipment. Be prepared to show your manager the specific FASB ASC references that provide the appropriate guidance Also prepare a brief memo explaining to your manager the different levels of the Codification and how to use the Codification system.Recording transactions in the accounting system requires knowledge of the important characteristics of the elements of financial statements, such as assets and liabilities. In addition, accountants must understand the inherent uncertainty in accounting measures and distinctions between related accounting concepts that are important in evaluating the effects of transactions on the financial statements. Instructions Log in and provide explanations for the following items. (Provide paragraph citations.) When you have accessed the documents, you can use the search tool in your Internet browser. a. The three essential characteristics of assets. b. The three essential characteristics of liabilities. c. Uncertainty and its effect on financial statements. d. The difference between realization and recognition.Financial accounting rules require firms to assess whether they will recover carrying amounts of long-lived assets and, if not, to write down the assets to their fair value and recognize an impairment loss in income from continuing operations. Impairment charges often appear as a separate line item on the income statement of companies that experience reductions in the future benefits originally anticipated from the long-lived assets. Conduct a search to identify a firm (other than those given in this chapter) that has recently reported an impairment charge. Discuss how the firm (a) reported the charge on the income statement, (b) determined the amount of the charge, and (c) used cash related to the charge.
- Consider the statement: Accounting is a measurement and communication discipline. Evaluate the statement with reference to assets valuation and presentation on financial statements. Support your views with reasons, examples and references to scholarly literature. Criteria: Explain and describe the measurement aspects of accounting in relation to assets valuation and presentation on financial statements. Examine and describe the communication aspect of accounting in relation to assets valuation and presentation on financial statements Give reasons and examples Provide disclosures that would be necessary to communicate your thoughtsAn assessment of accounting practices for asset impairments is especially important in the context of financial reporting quality in that it requires the exercise of considerable management judgement and reporting discretion. The importance of this issue is heightened during periods of ongoing economic uncertainty as a result of the need for companies to reflect the loss of economic value in a timely fashion through the mechanism of asset write-downs. There are many factors which can affect the quality of impairment accounting and disclosures. These factors include changes in circumstance in the reporting period, the market capitalization of the entity, the allocation of goodwill to cash generating units, valuation issues and the nature of the disclosures. Required: Discuss the importance and significance of the above factors when conducting an impairment test under IAS 36 Impairment of Assets.Recording transactions in the accounting system requires knowledge of the important characteristics of the elements of financial statements, such as assets and liabilities. In addition, accountants must understand the inherent uncertainty in accounting measures and distinctions between related accounting concepts that are important in evaluating the effects of transactions on the financial statements. Instructions Access the IASB Framework at the IASB website. When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following items. (Provide paragraph citations.) a. Provide the definition of an asset and discuss how the economic benefits embodied in an asset might flow to a company. b. Provide the definition of a liability and discuss how a company might satisfy a liability. c. What is “accrual basis”? How do adjusting entries illustrate application of the accrual basis?
- An analyst must be familiar with the determination of income. Income reported for a business entity depends on proper recognition of revenues and expenses. In certain cases, costs are recog- nized as expenses at the time of product sale; in other situations, guidelines are applied in capi- talizing costs and recognizing them as expenses in future periods. Required: a. Under what circumstances is it appropriate to capitalize a cost as an asset instead of expensing it? Explain. b. Certain expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the rationale for recognizing expenses on such a basis.The Framework issued by the IASB suggests that to show a true and fair view the information in financial statements should: A. Not be so drawn that it could mislead users B. Be an accurate and full record of transactions within each accounting period C. Be prepared on a consistent basis from year to year. D. Comply with Accounting Standards and possess suggested qualitative characteristicsWhich of the following statements is correct in relation to the contents of the IASB Conceptual Framework (2018): (i) Comparability is a fundamental qualitative characteristic of useful financial information (ii) An entity shall apply the "going concern" assumption if it is entering bankruptcy in the current quarter. (iii) The concept of physical capital maintenance requires applying the current purchasing power measurement basis (iv) The concept of prudence implies that in preparing financial statements management should seek to overstate assets and income and to understate liabilities and expenses a. (iv) b. (iii) c. (i) d. None of the statements is correct e. (ii)
- At a recent meeting of the accounting staff in your company, the controller raised the issue of using present value techniques to conduct impairment tests for some of the company's fixed assets. Some of the more senior members of the staff admitted having little knowledge of present value concepts in this context, but they had heard about a FASB Concepts Statement that may be relevant. As the junior staff in the department, you have been asked to conduct some research of the authoritative literature on this topic and report back at the staff meeting next week. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and access the FASB Statements of Financial Accounting Concepts. When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following items. (Provide paragraph citations.) (a) Identify the concept statement that addresses present value measurement in…You were requested to personally deliver your auditor’s report to the board of directors of Sebal Manufacturing Corporation and answer questions posed about the financial statements. While reading the statements, one director asked what are the precise meanings of the terms cost, expense, and loss? These terms seem sometimes to identify similar items and other times dissimilar items.”book value of the component’s net assets. The component was operating at a loss from the beginning of the year. in addition, Lynn had one of its manufacturing plants destroyed by an earthquake during the year. Earthquakes are not uncommon in Lynn’s operating environment. 1. Explain how Lynn should report discoutinued operations of a component of its business on its income statement for this year. Do not discuss earnings per share requirements. 2. Explain how Lynn…FAR- Conceptual Framework Kindly help me answer the following: 11. Which is an implication of the going concern assumption? * a. Depreciation and amortization policies are justifiable and appropriate. b. The current and noncurrent classification of assets and liabilities is justifiable and significant. c. All of these are an implication of going concern. d. The historical cost principle is credible. 12. The concept of accounting entity is applicable * a. Only to business organisations b. Only to the economic aspects of business organizations c. Only to the legal aspects of business organizations d. Whenever accounting is involved 13. The overall objective of financial reporting is to provide information * a. That allows owners to assess management performance. b. About assets, liabilities and equity of an entity. c. That is useful for decision making d. About financial…
