Company Accounting Homework: Fair Value and Impairment

This assignment solution addresses key concepts in company accounting, specifically focusing on the impairment of assets. It begins by defining an impairment loss and explaining when an impairment test should be undertaken, referencing AASB 136/IAS 36. The solution provides answers to questions concerning the identification of market participants, fair value measurements, and the circumstances under which a market price can be disregarded. The analysis includes factors that may influence asset valuation and explores the measurement of fair value based on market data. The document also highlights the importance of considering market participants and their impact on asset and liability pricing. The assignment covers the accounting treatment of impairment losses, the identification of market participants, and the use of fair value in financial reporting, providing a practical understanding of these critical accounting principles.

Running head: COMPANY ACCOUNTING
Company accounting
Name of the student:
Name of the university:
Author’s note:

1COMPANY ACCOUNTING
Table of Contents
Answer to question a..................................................................................................................2
Answer to question b..................................................................................................................2
Answer to question c..................................................................................................................3
Reference:..................................................................................................................................4

2COMPANY ACCOUNTING
Answer to question a.
It is not important for a firm to identified market participants inspire of market value
of as well the liability is depended upon market participants would be using the pricing the
asset or obligations when acting in the best interest for the economic. The firm identifies the
features that separates the market participants generally, which considering the following
factors:
– The assets or obligations
- The market which benefit the asset or obligations as well as market participants with which
should involves in transaction. (Barker & Schulte, 2017)
Answer to question b.
Fair value is a measurement which uses market as its base and not a measurement
which is entity-specific. Some market data or market transactions which are observable may
be accessible for assets and liabilities. The aim of a fair value measurement is same for both
the situations- to guesstimate the cost at which a transactions are present (Sarker, Dvorkin &
Ortega-Vazquez,2015). Being a measurement that is measurement based, fair value is
calculated by utilising the norms that the market-based measurement, by utilising the norms,
which market contestants would use while setting the price of the asset or liability, it also
includes norms about risk. Therefore, the purpose of an entity is to hold an asset or to settle or
else achieve a liability that is not in relevance while measuring the fair value. ( Dawidowicz,
Radzewicz & Renigier-Biłozor, 2014)

3COMPANY ACCOUNTING
Answer to question c.
An organisation is unwilling to transact at a price if it is provided by a market
participant, in that case the price found to be disregarded Only if a specific reasons relating to
the value of asset that are not related to the fair value measurement. The obligations of an
equity shares considering as an instrument of asset. The market price of the shares, in which
the share is distributed among the public is need to be adjusted according to requirement. The
value of the assets doesn’t return the impacts of a limitation preventing the sale of an asset.
There are several factors that may include with the quoted price. Normally the factors are- (a)
Market price of the asset that related to a same kind of obligation or equity shares which is
held by another party as assets. (b) The units relating to accounts for the asset may not similar
for the entities obligations or equity instruments (Palea, 2014)

4COMPANY ACCOUNTING
Reference:
Barker, R., & Schulte, S. (2017). Representing the market perspective: Fair value
measurement for non-financial assets. Accounting, Organizations and Society, 56, 55-
67.
Dawidowicz, A., Radzewicz, A., & Renigier-Biłozor, M. (2014). Algorithm for purposes of
determining real estate markets efficiency with help of land administration system.
Survey review, 46(336), 189-204.
Palea, V. (2014). Fair value accounting and its usefulness to financial statement users.
Journal of Financial Reporting and Accounting, 12(2), 102-116.
Sarker, M. R., Dvorkin, Y., & Ortega-Vazquez, M. A. (2015). Optimal participation of an
electric vehicle aggregator in day-ahead energy and reserve markets. IEEE
Transactions on Power Systems, 31(5), 3506-3515.