Myer Holdings Ltd: 2018 Annual Report - Asset Impairment Report

This report analyzes the asset impairment of Myer Holdings Ltd based on the 2018 annual report, focusing on intangible assets. It addresses the necessity of impairment tests, explaining how changes in asset value and useful life trigger these assessments. The report details the impact of impairment on the company's balance sheet and profit and loss statement, highlighting that impairment losses reduce the carrying value of assets and are recognized as operating expenses. The analysis includes the calculation of goodwill values for Myer Holdings at July 29, 2017, and July 28, 2018, explaining the significant decrease due to impairment. Furthermore, the report identifies other intangible assets, such as brand names and trademarks, that were impaired during the period, discussing their accounting treatment, including amortization and impairment testing. The report references relevant accounting standards, such as AASB 136/IAS 136, to provide a comprehensive understanding of asset impairment within the context of Myer Holdings' financial performance.

Running head: REPORT 0
CORPORATE
ACCOUNTING
MAY 30, 2019
STUDENT DETAILS:

REPORT 1
1. The accounting rule suggests reviewing the carrying values of fixed assets of company (the
total cost of assets minus the accumulated depreciation) for impairment, whenever there is
the change in situations that can affect the useful life of asset, salvage value, or current
market value. The balance sheet of company can overemphasize company’s assets; either
due to the fair value of assets are lower in comparison of the carrying amounts, or for the
reason that the estimates of accountants are not correct. For an example, the depreciation’s
calculationneeds estimates of the useful life, residual value, as well as benefit’s patterns
(Bragg, 2017).
2. In a case, when company runs the business, which uses the depreciable fixed assets and
prepares financial statements according with the generally accepted accounting principles,
then the asset’s impairment may affect the balance sheet as well as income statement at
similar point. There is an impact on both the balance sheet and profit & loss account of a
company while accounting for the asset impairment losses. The impairment loss is to be
immediately recognised in the income statement of the company at the debit side where all
other operating expenses are reported. The impairment loss also leads to decline in the
carrying value of the asset, which is impaired. As the impairment loss is a non-cash item that
is it has no impact on flow of cash in and from the business. In different terms, the
impairment loss of asset will be reduced from the carrying value of asset to figure out the
revised carrying value of that particular asset for the purpose of financial report. Further,
the depreciation amount can be adjusted because the previous depreciation was depended
on the old carrying value of assets of company (Vasek, et. al, 2016).
3. Calculation of closing value of goodwill at 29 July 2017-

REPORT 2
Particulars Amount
Opening value of Goodwill 492131
Less: Accumulated amortisation Nil
Net book value of Goodwill 492131
Less: impairment 27097
Closing value of goodwill at 29 July 2017 465034
Calculation of closing value of goodwill at 29 July 2018-
Particulars Amount
Opening value of Goodwill 465034
Less: impairment 465034
Closing value of goodwill at 29 July 2018 0
The goodwill of company arising on a purchase of the Myer business amounting to 465 million
dollars ($465 million at 29 July 2017) may not be allocated to the individual CGU of group (the stores
of group), and therefore has provided to a business of company. Additionally, at the interim
reporting period, the carrying value exceeded the recoverable amount and the impairment cost was
recognised in relation to goodwill amounting 465 million dollars (Braun, et. al, 2015).
4. Other than goodwill, the brand name and trademark have been impaired between 2017 and
2018. The Group has recognised an impairment of the Myer goodwill, impairment of brand
name and impairment of trademark. The brand’s useful life is measured over acquisition.
The brands that do not have foreseeable brand maturity date; have been measured as
having indefinite useful life as the opinion is that there are no predictable limits to the
period over those main brands are anticipated to produce net cash inflow for company.

REPORT 3
Consequently, the brands are not amortised. In its place, the brands are measured for the
impairment yearly, or the repeatedly, in a case when events or modifications in situations
state that they may be impaired, and are recorded at the cost minus accumulated
impairment loss. The Brand names with the restricted useful lives are amortised over 5 years
via a straight-line method. In this way, they are recorded at the cost minus accumulated
amortisation as well as impairment loss (Linnenluecke, et. al, 2015).

REPORT 4
References
Bragg, S. M. (2017). Fixed Asset Accounting. AccountingTools LLC. New York: Routledge
Braun, K. V. N., Christensen, D., Doernberg, N., Schieve, L., Rice, C., Wiggins, L., ... & Yeargin-Allsopp,
M. (2015). Trends in the prevalence of autism spectrum disorder, cerebral palsy, hearing
loss, intellectual disability, and vision impairment, metropolitan Atlanta, 1991–2010. PloS
one, 10(4), e0124120.
Linnenluecke, M. K., Birt, J., Lyon, J., & Sidhu, B. K. (2015). Planetary boundaries: implications for
asset impairment. Accounting & Finance, 55(4), 911-929.
Vasek, M. J., Garber, C., Dorsey, D., Durrant, D. M., Bollman, B., Soung, A. & Funk, K. (2016). A
complement–microglial axis drives synapse loss during virus-induced memory
impairment. Nature, 534(7608), 538.