PART A Introduction Introduction to Ausenco.com
Added on 2020-05-16
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1Advanced Financial AccountingName:Course Professor’s nameUniversity nameCity, StateDate of submission
2PART AIntroductionAusenco.comAusenco is an engineering company that was founded in Brisbane, Australia in the year 1991 by the current CEO and managing director Zimi Meka and Bob Thorpe one of the board members inthe company. It was listed in the year 2006 in the Australian stock exchange, ASX. It has multiple subsidiaries which are working also in both South and North America. Ausenco began expanding in 2008 by acquiring other companies to enhance their services in pipeline systems and vector engineering. It also invested in coal handling processing plants (Beechy et al., 2014). However, the company has tested several assets for impairment since their acquisition. As of endof financial year 2015, the company reported revenue of $179.15 million, a gross profit of $ 152.337 million, a negative operating income of $-52.971 million, a net loss of 62.717 million and a negative diluted earning per share of 0.36Within your firm’s latest annual report, find1.Assets meant for impairment in the companyImpairment: what is meant by impairment of an asset?The term "impairment" does not indicate anything other than a devaluation, that is to say, that thecurrent value of an asset no longer corresponds to the book value (value of the asset registered in the books), which generates an error in the balance sheet, If the value of an asset rises too much,
3the benefits and the losses derived could be erroneous. In principle, both assets and liabilities of abalance can deteriorate.There are several assets that have been tested for impairment. This Standard should be applied in accounting for impairments of any asset class, except for the following:(a) Assets that may arise from contracts on construction(b) There is also impairment of deferred assets tax(c) Employee benefits cost assets can be impaired(d) Financial instruments as disclosed in the scope of IAS 32(e) Property investment measured at fair value (f) Impairment on lists of subsidiaries owned by the company(g) Joint venture 2. How the company conducts its impairment testingImpairment test: what is it and when does it apply?The value of a company's assets is not engraved in stone. Financial crises, natural catastrophes ormarket fluctuations can cause unforeseen devaluations of their value. As soon as an indication of such loss of value of the assets included in the balance sheet is detected, it is time to carry out an impairment test or asset impairment test(Lewis, 2011). Thanks to this valuation possible errors in the balance are corrected and the real value of the company is judged more adequately.
4IndexImpairment: what is meant by impairment of an asset?What is the utility of an impairment test?How to make a goodwill impairment test: Although there are territorial differences that affect the accounting of companies, IFRS (International Financial Reporting Standards) establish IAS 36 at the supranational level, with IAS 36 as its Spanish equivalent, as the standard that defines asset impairment and its calculation. Only those values that are already regulated by other standards, such as, for example,inventories, financial instruments or real estate investments are excluded from it.The amount in the books of the assets is greater than its value in the stock marketIntangible assets with an unlimited useful life or that cannot yet be used and goodwill, on the other hand, must be subjected to this impairment test every year, although the date can be freely chosen. Of course, in the consecutive years the chosen date must be maintained the first time.3.Has the company recorded any impairment within the financial fearNO.Losses due to deterioration of the value of the patrimonial elementsIn accounting terms, there will be an impairment loss on an item of PPE or assets when its book value exceeds its amount recoverable, understood as the greater of its fair value less selling costs and its value that is currently in use (Kothari and Barone, 2011).
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