Accounting for Corporations Report 2022

Running head: Accounting for corporations
Accounting for corporations
Name of the Student
Name of the University
Author’s note

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Executive summary
The report is the focus in discussing the purpose of an impairment test on the assets and
evaluating the best technique upon which they can successfully undertake a test upon the assets.
The explanation upon which goodwill is affected during the impairment test. The necessary steps
highlighted upon individual assets, cash-generating units regarding asset management are
discussed following the AASB 136 structure is elated effectively. Impairment of assets, reversals
following the accounting standard, the effect of asset impairment related to the financial
statement of the business is described following the norm.

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Part A...........................................................................................................................................3
1. Purpose of impairment test..................................................................................................3
2. Undertaking impairment test...............................................................................................3
3. Effect of impairment test by existence of goodwill.............................................................5
4. Steps followed in implementation of impairment tests.......................................................6
5. Reversal for impairment looses...........................................................................................7
Part-B...........................................................................................................................................8
1. The measurement basis for assets AGL energy limited......................................................8
2. Assets of the company.........................................................................................................9
3. Number of assets being impaired......................................................................................10
4. Reversal of impairment loss of AGL Ltd..........................................................................10
5. Effect of asset impairment to AGL limited.......................................................................11
Conclusion.....................................................................................................................................12
Reference.......................................................................................................................................13

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Introduction
The primary objective of the report focuses on the application of Australian Accounting
Standard that is equivalent to the international accounting basis. Impairment of assets in AASB
136 is focused to resemble the conditions encrypted in it. The report consists of two parts, where
the first part focuses on explaining the various types of impairment associated with it. However
in the second part it is focused on analyzing how other companies are applying the structures of
AASB 136. In the first part, the purpose of impairment test resembling the assets in it is
disclosed for the assets. In the second part it is discussed that what is the best time to undertake
impairment test. How does the existence of goodwill will affect the impairment test. There are
different types of test are followed in order to apply impairment test, there are two structures i)
individual assets ii) cash generating units. During the last stage, it is focused on reversal of
impairment of losses are disclosed. In part-B, measurement for the basis of assets area disclosed
effectively. The company’s assets are discussed which include the property, plant and equipment
and also it focuses on intangible assets. The goodwill of the company is also accessed whether or
not it is flexible. It is verified whether any reversal of impairment is analyzed for incurring losses
or not. Effect of asset impairment on the balance sheet and the income statement is analyzed in
concurrently associated with the statement.

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Discussion
Part A
1. Purpose of impairment test
The focus of this standard is to ensure that the procedure that is applied is carried with no
more cost than the recoverable amount prescribed by them. However, asset that is carried into
much more than the recoverable amount and if the carrying amount of this feature gets exceed
amount in order to be recovered by enabling the sale of the asset structure. Altogether asset
quality is described as the impairment standard that is required in the entity to fetch result of the
recognition of impairment loss (Bokhari & Geltner, 2018). This standard specifically entitles the
reversal of impairment loss association and also it generally prescribes disclosures associated
through it.
The standard is applied in various entities which is enabled to require to prepare financial
statements with in accordance of the corporation act and also in relation to reporting of entity.
General purpose of financial statements of equally considering each other reporting entity is
assorted purposefully to succeed. The main function of AASB 136 helps to reduce disclosure
statements and it is the main reason of impairment test.
2. Undertaking impairment test
It is gently required because it helps to generalize the scopes of protecting the investing
in property which is measured at the fair value that in accordance with the agriculture activity
that too in accordance to asset management. This is the standard that is applied to the assets
which are carried in accordance of revalued amount that is focused on fair value of the assets
with maintaining the Australian Accounting Standard. It is particularly focused on analyzing the

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fair value of the assets in considering market value of it. The difference associated with it
considered between assets fair value and the fair value less cots to the sell is measured as direct
incremental costs in relation to the dispose of assets (Agl.com.au, 2019). There are instances
when the disposal costs are measured as negligible but somehow the recoverable cost is
considered necessarily closer to impairment of the revaluation requirements and it is concluded
as necessary estimation.
Recoverable amount are identified by ensuring the requirements associated with it. In
AASB 136 these requirements are considered as the assets which is genuinely applied to
individual assets and also including cash generating unit. The requirements associated with it for
recognizing and measuring impairments of loses for the assets with maintain the recognition
other than the goodwill structure is generating better degree of profit in acknowledging the using
structure of it. Reversal of loses are impairing to the best level of performance despite of the
loses which is practiced by the associative structure leveled through it (Anderson et al., 2014).
The ability of intangible assets in association of generating sufficient amount of future economic
transformation structure which is performed into benefit in focusing to refer to the recovery of
carrying an amount of subject to greater amount of uncertainty while much before the asset
structure is quit available for the using scenario of it. The Australian standard always focuses on
carrying amount of tangible assets through the usage of impairment stock availability. Although,
in respecting through the outsourcing of carrying an amount of intangible assets is quite risky in
nature that is generally used by the structure of other companies.
External sources of information sets out structure that during the period, which is
generally declined significantly by focusing more than what it, is expected as the result of the
passage of time or even focusing to the normal usage of it. Whereas significant changes with

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enforcing to the particular faces indulged through it, many instances are taken into consideration
that are technological, market, economical reformation and most importantly the environmental
entity operation. These are the most important operations, which are taken into consideration by
focusing in the market structure. Market interest rates are duly taken into consideration by
analyzing the market return on investment which is effected to disclose the discount rate in
assessing the asset’s value. There are many issues of increasing and decreasing factors for
recovering the asset’s market capitalization. Physical damage in asset management is very
crucial in enforcing the identity in referring the obsolesces of the net assets. There is significant
adverse effect, which is enacted to take place within the particular period, and they are focused to
associate in the future segment and it is jointly controlled by with the controlled version of
entity. It is also associated within the estimated period and the dividend is organized to declare
within the value of function (Buela-Casal et al., 2016).
3. Effect of impairment test by existence of goodwill
According to (Yik, LK & Chin, 2019), the goodwill and intangible assets focuses on
representing the important aspect of the organization where the net worth is emphasized with the
rules of treatment and it also focuses to provide implication for the company valuation. In
accordance to the AASB 136, testing of the goodwill is tested for the impairment in
concentrating on the impairment of the annual basis concept. In the case of testing the
impairment, different sort of entities are allocated in association to the expected benefit, which is
referred from financial synergies (Berta & Wilde, 2018). These groups are mainly associated
with lowest level considering within the entity. This entitles to gently provide opportunities
through management subscription in order to monitor the intangible asset of the company. The
most important and lethal intangible asset is referred as the goodwill that is incorporated as the

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source of earning revenue (di Prampero & Osgnach, 2019). Goodwill assertion is very much
important on referring on the balance sheet by reducing the carrying amount of the assets that is
referred to. Recoverable amount is organized representing the value of goodwill in the balance
sheet. It is done due to several reasons; goodwill does not really have the isolation value
resembling on the balance sheet. There is neither any such option where it can be separated from
the company so that it can be sold separately with respect to the rules and regulations permitted
in AASB 136 (DeFond et al., 2018).
However, recoverable value of goodwill is issued with respect to recoverable amount of
value that is concentrated on the unique value of transformation of the goodwill as it is gently
based on the equity value in the market. However, equity value is referred as the value that is
solely referred as the company’s value of equity. There are several instances when results are
organized with investment capital amount in relation to the optimal function isolated with the
value. After performing to the compare amount of resultant difference, it is however then
calculated based on equity value less than shareholder’s equity (Gârleanu & Pedersen, 2018). It
is also referred as the enterprise value less than invested amount of capital. Hence, it is proved in
during to allowance of the concept of diversified conception in referring to the Australian
standard of conception, which is mainly intercepted in diligence to the analysis of segmentation
of the equity value and then the recoverable amount is conceited along with it.
4. Steps followed in implementation of impairment tests
Goodwill impairment standards as mentioned by the AASB 136 standard discusses that
there are two types of was that are conducted to modify traditional steps with the focus of
modifying the assertion of goodwill structure. According to (Frank, 2019), it is focused on
analyzing the quantifying data of the fair value in association of discounting cash flows.

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However, by calculating the impairment of the assets there are steps which is taken into
consideration for calculating the two step case for calculating the scenario of the amount of
transferring the usage of liability of the previous transaction. There are basic comparisons which
are made in accordance of recoverable amounts.
5. Reversal for impairment looses
Reversal of impairment loses are practiced in identifying in order to carrying amount of
the asset which is other than goodwill and it is attributable in focusing to the impairment loss
(Nicolae et al., 2019). It is conducted that shall not allow to exceed the carrying amount which is
being determined and which has no impairment of losses that can be recognized for the
allocation of asset during the previous years. Increase in carrying amount concept of the asset
structure outclasses the conduction of goodwill and it is also associated with recognizing the
amortization asset which is conducted along with it (Di Maria & Segoloni, 2018). In the
revaluation technique, entities are allowed to entitle the normal Australian standard that is
applicable to significantly apply for it.
Reversal for the impairment loss for the asset structure is resembled by ignoring the
association of goodwill and it helps to recognize the association of the profit or loss unless the
asset is carried at the revaluation amount, which is focused on accordance with the standard on
the impairment of losses associated with it. It is focused to be treated as the revaluation
increment in focusing on the accordance with different standard (Neuhierl & Weber, 2018).

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Part-B
1. The measurement basis for assets AGL energy limited
It is observed as the reality of financial statements which is impacted in the numbers that
is enacted to deal with measurement of the items that is focused in the measurements for
determining of monetary amounts included in the items which includes assets, liabilities, income,
expenses as well as equity structure of the company. It is basically measured as well as presented
with the associative skills involved by the managers of the organization. The biggest energy
sector is very much balanced in classifying the structure of the company. It especially follows a
mix in structuring the measurement by claiming certain amount of historical cost and involving
certain amount of concluding the fair value cost (Muda et al., 2018). The company always tries
to embed focus on determining the measurement of items which are transcript by using the
specific standard by dealing with specific items included in it. The company focuses on different
types of items which is used by them in the industry; such as inventory has lower cost
measurement in AGL (Traina, 2018). Investment property concludes of fair value, which is
measurable without the help of undue cost, or the effort associated with it. The property, plant
and equipment is associated with the measurement is accumulated is absorbed with impairment
losses and also leading to the cost which is less than the accumulated depreciation. Intangible
assets of it are associated with accumulated amortization in relating to the par of impairment
losses relating to it successfully (Kumhof, & Noone, 2018). The agricultural product, which is
used by them in association with it, is perpetuated with the strength to the fair value and
concluding measurable without the undue costa and by associating the cost model.

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2. Assets of the company
AGL Ltd as particular assets which are very important in conducting their business
(Nedelkoska & Quintini, 2018). Cash and short term investment is one of them. There are
subparts of it which is very much straightforward into it. During the year, 2019 cash items had
115 million $, in 2018, it is around 463 million $, 2017 has 154 million $, in 2016 they had 252
million $. However the short-term investment in 2019 is 251 million $, however in 2018 it is 200
million $ and then it went down in the previous year but earlier it was quite higher though. The
account receivable turnover of the company is around 7.39 during the year of 2019, it went down
to 6.67 during 2018. However, during the previous stages it was even much lower where it
shows the figure stands to 6.47 and later to 5.65 and 5.64. The other sort of assets which is
termed as long term assets, is featured into inventories, finished goods, raw materials, and also
other kind of current assets. Inventories for the current year is 388 million$, in 2018 it is 370
million $, 351 million $ in 2017. The value of worth contained to increase in the given years
which is conditioned to be the positive intent of the company. However, during earlier part the
value of the company was even much worse. The profitability section was not being able to
incorporate the variations to incorporate betterment of the employee recruitment (McCaffery,
2018). Finished goods were considered an important aspect material within the company.
However, data of the company did not showed in favor of them (Nekovee & Pinto, 2019). Other
types of current assets are incorporated into much betterment of the company. It also helped to
generate much associated profit with respect to the skills of the employees. Managers of the
company respected the association of the workers and decided to have their views and concern to
manipulate the decision feedback during the meetings. It helped to generate the profit of the
company to revert their benefits associated to it.

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However, the property, plant and machinery are also the main inventory which is
associated with the company analysis. The machinery equipment is considered as the beneficial
inventory for the betterment of business (Ma et al., 2018). Machinery and equipment policy is
the long-term benefit, which is associated with the betterment of the organization attribute that is
embedded for the proper treatment in association.
The organization does have goodwill in association of the betterment of the creativity and
innovation structure followed by them to enable creativity of the association succeeding by them
in operational benefits (Maus et al., 2018).
3. Number of assets being impaired
Throughout the number of assets being listed by the company, baring two or three assets
every asset are considered in entitle to issue of impairment. According to (Handayani, Maradona
& Darma, 2018), if we take up the association of cash and short-term investments in respect of
the company, the cash analysis incorporated of the investment scenario is cultivated by preparing
impairment analysis. Short-term investment for the company is considered with the impairment
scenario to enable within the asset structure. Account receivable and including the total
receivable is also considered with along the impairment analysis is also considered with
impairment structure. The administrators of the company to undergo with revere property and
equipment structure to focus on impairment so that the fair value of the fixed assets are easily
considered for the betterment of the organization (Wang, Campbell & Schoenfeld, 2019).
4. Reversal of impairment loss of AGL Ltd
The reversal of impairment losses is referred as the task where the business cannot fix up
the situation where they cannot really turn back or reverse the situation where the company faced

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an impairment loss because of the passage time elated or they are unwinding the discount
associated with them. However, reversal of the impairment loses are signified as the profit or
losses that is incurred by relating it to a revalued asset.
Impairment loss of AGL limited stands up to $27 million and it was really recognized
during the prior period in association to it. However, the cash outflows of the organization are
expected to reverse directly from the generating cost associated to it.
5. Effect of asset impairment to AGL limited
Impairment of the assets helps to incur the benefits in accordance to the absorbing unit by
enabling the appropriation in income statements. It was used in inventories where it turned up to
increment in inventory section of the business. Finished goods were impaired to the success of
the company during 2016-2018, where the net value of it was considered much higher. Raw
materials in accordance to balance sheet of the organization were impaired in 2019, so that
overall value deemed to increase and it generated better success through it (Klettner, Clarke &
Boersma, 2014). The fair value of the fixed asset is also derived through it. It is indicated to
management of Five Star Ltd that it is recommended to implement the impairment of assets to
signify the strength of revenue in the company in allocating increment in the financial statements
which will help in the long run process.

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Conclusion
It can be concluded from the above topic that impairment of assets are very important in
association of fixing up the benefits of the asset structure allocation. Although it helps to analyze
the purpose of the impairment test along with the procedure of undertaking the impairment test
of the assets; there are two processes, which are helpful in allocating the steps. Following it
separately, individual assets and cash generating assets are two types which are very much
necessary to undergo ad it is resulted appropriately. The various types of assets embedded within
the company is signified appropriately by impairing of it. However, the effect of impairment is
analyzed perfectly and hence it ensures that success factors generating is positive within the
discussed attribute.

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