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Assessment of Impairment of Assets

   

Added on  2020-05-16

15 Pages3085 Words91 Views
Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced financial accountingName of the universityName of the studentAuthors note
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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
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2ADVANCED FINANCIAL ACCOUNTINGAssessment Task Part A: Requirement i) Sims metal management limited conducts an impairment testing annually for goodwilland other intangible assets. Testing of impairment is conducted when there is objective evidencegiven by circumstance or happening of any events. Whenever there exists indication that it willbe difficult to recover the carrying amount of other definite lives intangible assets as indicated byoccurrence of some events and prevailing circumstances. Allocation of goodwill has been donefor impairment testing. The impairment testing for the cash-generating unit depicts excessheadroom of A$ 104.1 million for the year ending 30th June, 2016 (Simsmm.com 2018). Requirement ii)Sims metal management conducts the impairment testing of assets by reviewing theamount of their carrying value and when there exists and indication that assts requireimpairment. There is recognition of impairment loss when the estimated recoverable amount islower than the carrying amount of such assets. Recognition of trade and receivables is done atfair value and measuring it subsequently at amortized cost by deducting any provision ofimpairment. Trade receivables is written off against impairment account when it is identified byorganization such receivables become uncollectible. For impairment purpose, the carryingamount of property, equipment and plant are reviewed and as indicated by existence of any
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3ADVANCED FINANCIAL ACCOUNTINGobjective evidence and thereafter there is recognition of impairment loss. Intangible assets andgoodwill are tested annually for impairment as indicated by circumstances and occurrence ofevents. Assessment of impairment of assets are done by grouping them at the lowest levels wherethe cash flows have been separately identified and they are not dependant of cash flowsgenerating from other group of assets. Organization conducts annual testing of investment that ismade in joint ventures as indicated by the fact that their carrying value amount cannot berecovered and there are any circumstances and events (Simsmm.com 2018).Requirement iii)Impairment charge attributable to intangible assets and other goodwill for financial year2016 stood at A $ 53 million. After the analysis of annual report of Sims metal managementlimited, it has been ascertained that there has not been any impairment charge for the financialyear 2015 and 2017 in relation to assets and other goodwill (Simsmm.com 2018).
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