(AFA)Advanced Financial Accounting Assignment
14 Pages2938 Words70 Views
Added on 2020-05-28
(AFA)Advanced Financial Accounting Assignment
Added on 2020-05-28
ShareRelated Documents
Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced Financial AccountingName of the Student:Name of the University:Author’s Note:Course ID:
1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsPart A:..............................................................................................................................................2Answer to Part (i):.......................................................................................................................2Answer to Part (ii):......................................................................................................................3Answer to Part (iii):.....................................................................................................................3Answer to Part (iv):.....................................................................................................................5Answer to Part (v):.......................................................................................................................5Answer to Part (vi):.....................................................................................................................6Answer to Part (vii):....................................................................................................................6Answer to Part (viii):...................................................................................................................7Part B:..............................................................................................................................................7Answer to Part (i):.......................................................................................................................7Answer to Part (ii):......................................................................................................................8Answer to Part (iii):.....................................................................................................................8Answer to Part (iv):.....................................................................................................................9Answer to Part (v):.......................................................................................................................9References:....................................................................................................................................11
2ADVANCED FINANCIAL ACCOUNTINGPart A:The objective of this report is to focus on the impairment criteria and assumptions thatCoca-Cola Amatil use in order to conduct asset impairment test. Thus, the report would focus onthe impairment testing processes and the subjectivity associated with such processes. In order tocomment on these processes, the last published annual report for 2016 has been taken intoaccount, since the annual report of 2017 is yet to be published. Coca-Cola Amatil is one of thebiggest bottlers of non-alcoholic ready-to-drink beverages in the region of Asia-Pacific. Theorganisation is involved in operating in six nations including Australia, New Zealand, PapuaNew Guinea, Indonesia, Samoa and Fiji. The main products of the organisation include springwater, soft drinks, fruit juices, flavoured milk, iced tea, tea, coffee and other vegetable products(Ccamatil.com 2018). An asset is said to be impaired, when the carrying amount of an asset is higher comparedto its market value. The assets that are probable to be impaired constitute of non-current assetssuch as plant, property and equipment and intangible assets like goodwill (Paugam and Ramond2015). When adjustment is made with the carrying value of the impaired asset, there is recordingof loss in the profit and loss account of the organisation. At the time of writing off impairment,the carrying cost of the asset would be minimised, since the realisation of adjustments would bemade as loss and thus, there would be reduction in the value of the asset. Answer to Part (i):Based on the annual report of Coca-Cola Amatil in 2016, the impairment test for differentgroups of assets has been taken into account. Amortisation is not made for goodwill and otherintangible assets; however, annual impairment is tested. In case, the frequency is higher than
3ADVANCED FINANCIAL ACCOUNTINGonce in a period because of variations in circumstances or events, it denotes that there isimpairment of assets and the record is made in the financial statements at cost minus anyaccumulated impairment loss (Mazzi, Liberatore and Tsalavoutas 2016). The other assets likerproperty, plant and equipment, inventory and trade receivables are tested for impairment when itindicates that the carrying value of the asset could not be recovered. Answer to Part (ii):Coca-Cola Amatil carries out a two-step process in relation to impairment testing. Thefirst step is to compare the fair value of the reporting entity to the carrying value includinggoodwill. In case, the carrying value of the unit is higher compared to its fair value, the nextsteep of this test is to be conducted in order to determine the impairment loss amount, if any(Khokan Bepari, Rahman and Taher Mollik 2014). This step compares the implied fair valuerelated to the reporting unit with the carrying value of that unit. In case, there is excess carryingamount compared to the implied fair value, the recognition of impairment charge is made in theamount equal to the excess. The recognised loss could not be more than the carrying assetamount. Answer to Part (iii):Coca-Cola Amatil has recorded the following impairment expense in the year 2016:Intangible assets:In 2016, the organisation has recorded an impairment loss of $1,077.40 million, out ofwhich $14.4 million has been realised in brand names and trademarks, $944.3 million in IBAsand $118.7 million in goodwill.
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
HA 3011 Report on Impairment Testing and the Subjectivitylg...
|13
|3038
|34
HA 3011 Advance Financial Accounting Report - doclg...
|9
|1920
|38
Assessment of Impairment of Assetslg...
|15
|3085
|91
Course ID: Advanced Financial Accounting 13 13 Advanced Financial Accounting Accountinglg...
|14
|3078
|71
HA 3011 Advanced Financial Accounting of Sai Global limitedlg...
|12
|2497
|80
Advanced Financial Accounting - Assignment (pdf)lg...
|13
|2640
|64