Assignment Corporate Accounting | Impairment Testing
Added on 2020-04-01
9 Pages1600 Words72 Views
CORPORATE ACCOUNTINGCorporate accountingName of the studentName of the UniversityAuthors note
CORPORATE ACCOUNTINGAnswer to Part A:Reversal of an impairment loss for an individual assetThe impairment testing of all intangible and tangible assets are dealt withInternational Australian standard 136 that requires assets should not be carried atamount that is excessive of recoverable amount. The objective of this standard is toensure that assets are not carried at more than value of their recoverable amount.This particular standard for asset impairment is applicable for the general purpose offinancial report of entities and requiring entities to prepare their financial reportaccording to part 2M.3 of the corporation act. In order for meeting this particularobjective, it is required by organization when there exist any potential for assetimpairment, then all the assets within the scope should be tested for impairment(Bhasin 2015). At each reporting date, an entity is required to make the assessmentabout the indicator of impairment of assets as per the standard. Assessment byentity would be done by gaining information from both internal and external sources.Some of internal sources involve physical damage to assets, internal restructuringand any obsolescence. On other hand internal sources are adverse changes ineconomy, market and technology, changes in the market interest rates, net value ofassets higher than market capitalization and legal environment in which entityoperates (Arnold et al. 2016).The application of IAS 136 is provided to all assets excluding:Deferred tax assetsInvestment in property that is carried at fair value Inventories
CORPORATE ACCOUNTINGInsurance contracts assetsAssets that arise of generates from employees benefitAgricultural assets that assets carried at fair valueAssets generating from contracts of constructionNoncurrent assets that are held for saleFinancial assetsApplication of IAS 136 is mostly to the following assets:Machinery and equipmentsGoodwillAssets that are carried at revalue amountIntangible assetsBuildings and landsThe assets impairment loss other than goodwill is decreased or they do notexist might be indicated by some internal as well as external informational sources.Some of internal changes might be favourable and significant changes in theperformance or use of assets and external conditions might be positive change in theassets value and market conditions. Previously recognized impairment loss of assetsis reversed if there is improvement in recoverable amount since the recognition oflast impairment loss. Therefore, it can be said that any favourable changes in themarket conditions and with passing of time, there cannot be recognition of animpairment reversal. The carrying amount of assets should be more than theadjusted carrying amount of assets when there is recognition of an impairmentreversal. Such amount would have been determined if there were no previouslyimpairment loss. Their arises the need to review residual value of assets, it useful life
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Corporate Accounting - Assignmentlg...
|7
|1508
|125
Corporate Accounting and Reportinglg...
|9
|1514
|131
Corporate Accounting and Reporting (pdf)lg...
|6
|1429
|61
Corporate Accounting & Reporting Assignmentlg...
|9
|1655
|32
Reversal of Impairment of Goodwill and Journal Entries to Record Impairment Losslg...
|8
|1878
|403
Corporate Accounting & Reporting Assignmentlg...
|5
|1417
|52