Study on Corporate Accounting and Reporting

Running head: CORPORATE ACCOUNTING AND REPORTING
Corporate Accounting and Reporting
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1CORPORATE ACCOUNTING AND REPORTING
Table of Contents
Part A:................................................................................................................................2
Part B:................................................................................................................................5
References:........................................................................................................................7

2CORPORATE ACCOUNTING AND REPORTING
Part A:
Certain decrease in an asset’s net carrying amount leads to development of
upcoming unrevealed cash flows. The net carrying value might be gathered through
reducing depreciation from the asset acquisition expenses. Impairment takes place
while a company abandons or sells its asset because of drop in its capability to attain
advantages (Abdo 2016). For this reason, it is not required to consider impairment loss
as loss within a company’s profit and loss account. In computing the impairment loss,
certain influential dynamics leading to impairment of asset must be recognized. This
influential dynamic encompass changes in market situations, employee turnover, new
regulations or obsolescence associated with asset. Relied on the same, an asset’s fair
market price must be estimated and this can be considered as value that can be
attained once it is sold within the market (Carvalho, Rodrigues and Ferreira 2016). This
asset is to be realized as recoverable value or as estimated generation of future cash
flows in case the operation is carried out.
The fair market price must be compared with carrying value of assets mentioned
within the financial reports of the company after allocating the same. In case the fair
market value remains below the asset’s holding cost, this signifies the asset impairment.
In case of the impairment, results attained with support of the impairment might be
efficient from the perspective of the company (Che Azmi and English 2016). This is the
cause for which the need for investment increases. For measuring the impairment loss,
certain requirements are needed to be followed. Definite recoverable amount must be
decreased in case it is less in comparison to the carrying value. Secondly, impairment
loss is attained loss that is experienced through attaining variation between the