The Advanced Financial Accounting

Added on - 28 May 2020

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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced financial accountingName of the universityName of the studentAuthors note
1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsPart A:..............................................................................................................................................3Requirement i).................................................................................................................................3Requirement ii)................................................................................................................................3Requirement iii)...............................................................................................................................3Requirement iv)...............................................................................................................................3Requirement v)................................................................................................................................3Requirement vi)...............................................................................................................................3Requirement vii)..............................................................................................................................3Requirement viii).............................................................................................................................3Part B:..............................................................................................................................................4Requirement i).................................................................................................................................4Requirement ii)................................................................................................................................4Requirement iii)...............................................................................................................................4Requirement iv)...............................................................................................................................4Requirement v)................................................................................................................................4
2ADVANCED FINANCIAL ACCOUNTINGPart A:Requirement i)Impairment testing is conducted by Common wealth bank of Australia on annual basiswhenever there is indication that assets recoverable amount are lower than their carrying value.Organization has assessed impairment testing related to intangible assets such as goodwill andbrand name. For the purpose of impairment testing, allocation of goodwill is done to the cash-generating unit for comparing it to recoverable amount. Determination of recoverable amount isdone based on fair value by deducting cost to sells (Commbank.com.au 2018). Moreover, assetswith indefinite useful lives are tested for impairment.Requirement ii)For conducting the impairment testing, organization allocated the goodwill to cashgenerating unit and does the computation of recoverable amount. Publicly available earningsmultiples form the basis of calculation of recoverable amount. For determining the assessment ofgoodwill and other assets, recoverable amount of such assets are compared with carrying amountof individual cash generating unit or group of cash generating unit. Some of the indicators forimpairment are as for equity securities that are classified as assets available for sale. Anindication of impairment of any investment leads to testing of entire carrying amount ofinvestment in any associate or joint venture by comparing the carrying amount with itsrecoverable amount (Commbank.com.au 2018).Requirement iii)Commonwealth bank of Australia has recorded loan impairment expenses in both thefinancial year hat is 2017 and 2016 of amount $ 1095 million and $ 1256 million respectively.
3ADVANCED FINANCIAL ACCOUNTINGThese figures depict that impairment expenses on loan have reduced in the current yearindicating that there was 13% decrease in the expenses amount (Commbank.com.au 2018). Thereason is attributable to the lower provisional banking in market and institutional and privatebanking.Requirement iv)For determining the impairment of assets, organization relies on computation ofrecoverable amount using earnings multiple that is applicable to bank. Data on earning multipleare sourced from market and publicly available data. Assumption is made regarding priceearning multiple that is observed from the business. Group conducts the revaluation ofassumptions when there is any provision for change. Valuation techniques of assets are based onmarket value and are based on assumptions formed on market conditions (Commbank.com.au2018).Requirement v)Process of impairment testing of Common wealth bank of Australia does not involve anyconsiderable subjectivity as depicted from the analysis of financial report. The methodology of
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