Asset Impairment Analysis of Myer Holdings Limited

Executive Summary
This report document shows the analysis of asset impairment of Myer Holdings Limited, a listed
Company in Australian Security Exchange. It’s aimed at evaluating with reference, the evidence
that shows the need for testing assets impairment of the firm, the procedure in testing assets
impairment, the information required and also the Management flexibility available in the
determination of the asset impairment.
Introduction
Myer Holdings Limited is a merchant store company in Australia. It operates approximately 60
retail stores located across Australia. Myer limited company deals with a range of products
including menswear; women wear, children’s wear, electronics, cosmetics, and accessories
among others.
Impairment of assets occurs on intangible assets which involve identifiable non-monetary assets
that cannot be touched, physically measured or seen. For the financial year ended July 2018,
Myer Holdings limited had net intangible assets of $359,000,000. Intangible assets include
goodwill, Copyright, trademarks and trade secrets. Goodwill involves the difference between the
price that the company paid and the book value of the assets. Some intangible assets are
amortized, that gives a provision of depreciation on intangible assets while most of them are
written off when the company realizes that the assets are impaired. Accounting standard AABS
136, deals with non-financing assets like goodwill, identifiable intangible assets, and property,
plant and equipment. Non financing assets of a company are critical and they do affect not only
the financial position of a firm but also the financial performance of an entity, thus the
information relating to such need to be provided so that financial statements provide relevant and
reliable financial information important to the potential investors and other users of the data.
Impairment testing involves the process of ascertaining whether the net book value of assets also
called carrying amount outlined in the balance sheet of an organization needs to be maintained or
reduced. "Empirical evidence on the application of CGUS in the context of goodwill impairment
testing" TM Carlin, KJI, and Finch, (2010).

Possible of evidence of Assets impairment in Myer's Holding Limited
Change in the entity's environment such as political, technological, economic, market, and legal
involved with Myer Holding Limited needs to ascertain whether it affected the carrying amount
of the organization’s assets.
Change in sale volume of the organization- There has been noticed a drastic reduction change in
the sale volume as shown by the income statement of the year 2018 and that of 2017. This is an
evidence of asset impairment such as Goodwill of the organization to the customers could have
reduced leading to sale volume reduction.
Decline in the value of assets- The provision done on assets for the year financial year ended in
July 2018 is more than normal wear and wear, and this could be attributed by asset impairment in
Mayer Holdings Limited.

Carrying amount of asset in Myer's Holdings Limited is more than that of market value as
illustrated in the financial statements and the notes of the financial statements. This is a proper
indicator of the asset impairment of the company.
Production level in the company reduced since some of the assets has become obsolete. Thus
need to test asset impairment in the entity as there is an indication of such cases.
The financial performance of Myer Holding Limited has reduced for the fiscal year ended July
2018. The previous year the company had a profit of 11million, but for the current financial year,
it has a loss of 460million. This is a clear indicator of assets impairment.
Decline in the market share of the company- It has been noticed the reduction in market share of
the organization. There is 2.28% drop in the market share. This is an evidence of asset
impairment, "Australian Accounting Review, Better late than never, the timing of goodwill
impairment testing in Australia" KJi (2013).