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Report on Financial Impairment of AMP Limited

   

Added on  2020-05-16

15 Pages3074 Words72 Views
Running head: FINANCIAL IMPAIRMENTFINANCIAL IMPAIRMENTName of the StudentName of the UniversityAuthor Note
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1FINANCIAL IMPAIRMENTTable of ContentsAssessment task Part A....................................................................................................................2(i)Assets tested for impairment................................................................................................2(ii)Method of conducting the impairment test.......................................................................3(iii)Impairment expenditures...................................................................................................4(iv)Assumptions and estimates used by the company for conducting impairment test..........4For the calculation of value-in use the assumptions are as follows:............................................5(v)Subjectivity involved in the process of impairment testing..............................................5(vi)Interesting, surprising, difficult or confusing part to understand impairment testing.......6(vii)New insights regarding conducting the impairment.........................................................6(viii)Fair value measurement....................................................................................................7Assesstment task Part B...................................................................................................................8(i)Reason why the former accounting standards does not reflect the economic reality...........8(ii)Reasons why under the previous accounting standards the lease liabilities of thereporting entities in the balance sheet were 66 times more than the reported debts under thebalance sheet................................................................................................................................8(iii)Reasons why the Chairperson of IASB is in the view that under the previous accountingstandard no level playing field was there among some airline entities.......................................9(iv)Reasons why the Chairperson is in the view that the new standard will not be popularwith everyone...............................................................................................................................9
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2FINANCIAL IMPAIRMENT(v)Possibilities that the new visibility with regard to all the leases will result into betterinformed decision for investment................................................................................................9References......................................................................................................................................11
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3FINANCIAL IMPAIRMENTAssessment task Part AThe given report aims to throw light on the impairment component and the assumptions,which have been used by AMP Limited to prepare their financial statements and conduct theimpairment tests on the given assets. The report shall also elaborate on the procedures ofimpairment testing which are often used by the company and describes the subjectivity that willbe involved in the given procedure of conducting the given test (Amiraslani, Iatridis & Pope,2013). The annual report of the chosen company has been taken for the year ended as on 31December 2016. AML Limited is a bay area sales agency, which promotes various interiordecoration products. It has a large variety of flooring products for end users, architects andvarious design clients. It has products like rugs, flooring equipments, furniture and other interioritem (Annualreports.com, 2018). The company is established in Australia and makes use of awide variety of experience to inculcate new ideas and experience for the given consumers. An impaired asset of a company can be defined as an asset, which has a market value lessthan that of the carrying value of the given asset. The assets that are most likely to get impairedare the fixed tangible assets like property, plant and equipment. Intangible assets includeaccounts receivable, goodwill and others (loans, retirement & education, 2018). When the assetis impaired against its carrying value , the loss incurred is recorded in the income statement ofthe given company. After this procedure is followed, the asset reflects a reduced carrying costand the given adjustments shall be recognized as a loss and this shall result in the reduction in thevalue of an asset.
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