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Corporate Accounting and Reporting (Doc)

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Added on  2020-05-16

Corporate Accounting and Reporting (Doc)

   Added on 2020-05-16

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Running head: CORPORATE ACCOUNTING AND REPORTINGCorporate Accounting and ReportingName of the Student:Name of the University:Author’s Note:Course ID:
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1CORPORATE ACCOUNTING AND REPORTINGTable of ContentsPart A:................................................................................................................................2Part B:................................................................................................................................6References:........................................................................................................................7
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2CORPORATE ACCOUNTING AND REPORTINGPart A:The decline in net carrying amount of the asset is above the generation of futureunrevealed cash flows. The net carrying value could be obtained by deductingdepreciation from the cost of asset acquisition. Impairment occurs when a firm sells orabandons its asset due to fall in its ability to fetch benefits1. Thus, it is not needed torealise the impairment loss as loss in the profit and loss account of the firm. Forcalculating the impairment loss, the influential dynamics resulting in asset impairmentare to be identified. Such influential dynamics include variations in the marketconditions, new regulations, staff turnover or the obsolescence of the asset. Based onthis, the fair market price of the asset is to be anticipated and it is the value to beobtained after it is sold in the market. This could be realised as asset’s recoverablevalue or the expected generation of future cash flows, if the operation is continued.The fair market price is to be contrasted with the asset’s carrying value listed onthe financial reports of the firm after allocating the former. If the fair market value fallsbelow the holding cost of the asset, it indicates the asset impairment. Even though taxbenefit could be obtained with the help of impairment, the outcome might not beeffective from an organisational perspective. The reason is that the requirement forinvestment increases2.1André, Paul, Dionysia Dionysiou and Ioannis Tsalavoutas, "Mandated Disclosures Under IAS 36Impairment Of Assets And IAS 38 Intangible Assets: Value Relevance And Impact On Analysts’Forecasts" (2017) 50(7)Applied Economics2 Avallone, Francesco and Alberto Quagli, "Insight Into The Variables Used To Manage The GoodwillImpairment Test Under IAS 36" (2015) 31(1)Advances in Accounting
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