Advanced Financial Accounting | Report

Added on - 28 May 2020

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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced financial accountingName of the universityName of the studentAuthors note
1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsPart A:..............................................................................................................................................2Requirement i).................................................................................................................................2Requirement ii)................................................................................................................................2Requirement iii)...............................................................................................................................3Requirement iv)...............................................................................................................................3Requirement vii)..............................................................................................................................5Requirement viii).............................................................................................................................5Part B:..............................................................................................................................................6Requirement i).................................................................................................................................6Requirement ii)................................................................................................................................6Requirement iii)...............................................................................................................................7Requirement iv)...............................................................................................................................7References list:...............................................................................................................................10
2ADVANCED FINANCIAL ACCOUNTINGPart A:Requirement i)Intangible assets and goodwill of Bradken limited having indefinite useful life are testedfor impairment on annual basis as indicated by any event or by change in circumstances. S0omeother assets are assessed for the impairment when it is indicted that recoverable amount will beexceeding its carrying amount. Impairment of other financial assets are done when there isobjective evidence of occurrence of one more events. For the purpose of impairment testing,allocation of goodwill is done to cash generating unit. Impairment value of goodwill and otherintangible assets for the financial year 2016 and 2015 stood at $ 64103 million and $ 167182million. Total amount of impairment that was recorded on intangibles and goodwill is recordedat $ 64.1 million. Moreover, impairment of investment has also been done during financial year2016 for Austin engineering limited. Total amount of investment impairment for the year 2016stood at $ 128182. Amount recorded in impairment of available for sale financial assets for 2016is recorded at $ 6593 (Bradken.com 2018).Requirement ii)Impairment testing is conducted by Bradken limited for intangibles along with goodwillby the identification of same that are acquired in business combination based on the estimates ofmanagement about net present value of estimated future cash flows of assets. It also takes intoconsideration the combinations of independent valuations in some cases. Computation of valuein use forms the basis of determination of recoverable amount of cash generating units.Impairment testing of organization is done by the estimates and all the calculations relating toimpairment require the use of assumptions. Management of the group prepare financial forecast
3ADVANCED FINANCIAL ACCOUNTINGfor projecting financial cash flows for a period of five years. Extrapolation of cash flows beyondthe five-year period using perpetual growth rate (Bradken.com 2018).Requirement iii)Yes, Bradken limited has recorded impairment expenses during the year 2016.Impairment expense s relating to goodwill is recorded at $ 29039 million and 45503 for thefinancial year 2016 and 2015 respectively. During the period 2016, impairment expenseattributable to mining and transport is recorded at $ 108 million, for the engineering productsegments, value stood at $ 50.8 million and for the mineral processing segment, impairmentexpenses is recorded at $ 4.4 million. Moreover, impairment expense against license andcustomer list was recorded at $ 2.3 million and $ 12.8 million respectively ((Bradken.com 2018).Requirement iv)Bradken limited calculates the value in use by making assumptions regarding discountrates, sales margin and growth rates and all such assumptions have been determined bymanagement based on expectation of future and past performance. For discounting the forecastedcash flows, a post tax discount rate has been applied by management. Assumptions about growthrates are made by recognizing the competitive pressures and volatility of current economic
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