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HA 3011 Advanced Financial Accounting - Impairment Testing

   

Added on  2020-05-28

11 Pages1965 Words60 Views
Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced financial accountingName of the universityName of the studentAuthors note

1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsAssessment Task Part A:.................................................................................................................2Requirement i).................................................................................................................................2Requirement ii)................................................................................................................................2Requirement iii)...............................................................................................................................2Requirement iv)...............................................................................................................................3Requirement v)................................................................................................................................3Requirement vi)...............................................................................................................................4Requirement vii)..............................................................................................................................4Requirement viii).............................................................................................................................5Assessment Task Part B:.................................................................................................................5Requirement i).................................................................................................................................5Requirement ii)................................................................................................................................6Requirement iii)...............................................................................................................................7Requirement iv)...............................................................................................................................7Requirement v)................................................................................................................................8References list:...............................................................................................................................10

2ADVANCED FINANCIAL ACCOUNTINGAssessment Task Part A: Requirement i)Impairment testing of goodwill has been done unless there is an indication of impairmentand the carrying value of goodwill is done by deducting accumulated impairment. Theallocations of goodwill that are acquired are done to the cash generating units for impairmenttesting. For the reporting date, 2015 Worley parsons limited has conducted an impairment testingof goodwill of amount $ 198.6 million in financial year 2016 and there was recognition ofimpairment of investment in associates of $ 12.1 million and the total amount of accumulatedimpairment was recorded at $ 200.2 million (Worleyparsons.com, 2018). Requirement ii) The determination of impairment is done by assessing recoverable amount of cashgenerating unit of group that is related to goodwill. Group recognizes impairment loss wheneverthere is carrying amount of assets is more than their recoverable amount. The calculation ofimpairment testing is done by using projections of cash flow that is based on financial forecast ofhow the business will be performing consistently with external data and current and historicalexperience. Organization is required to make assumptions about any uncertain future events forestimating future cash flows (Worleyparsons.com, 2018).

3ADVANCED FINANCIAL ACCOUNTINGThe total amount of accumulated impairment in year 2016 is recorded at $ 200.2 million. Requirement iii)Yes, Worley parsons limited have recorded an impairment expenditure of $ 7.5 millionduring the financial year 2016 in its associate Cegertec (Worleyparsons.com, 2018).

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