Got a tricky question? Receive an answer from students like you! Try us!

Goodwill Impairment - Research Paper Example

Only on StudentShare
Research Paper
Finance & Accounting
Pages 3 (753 words)


Finance and Accounting: Goodwill Impairment Introduction Goodwill Impairment means that the value of goodwill of a company diminishes as compared to the time of its purchase. In other words the fair value of the goodwill is less than the value that is required to carry it…

Extract of sample
Goodwill Impairment

However, there are several noticeable differences in the two accounting approaches as listed below: In the context of allocation of Goodwill, allocation is done to an operating unit in case of U.S. GAAP. In IFRS language, its allotment is done to a small group of assets that generates flow of cash and such unit has to be smaller than the operating segment of a company. In the context of the recognition of the loss of impairment, the US GAAP considers such a case if the implied fair value exceeds the amount for carrying of a particular reporting unit and the amount for carrying of the goodwill (Alexander & Britton, 2004). It is a two step approach. On the other hand, in case of IFRS, which follows a one step approach, weigh cash generating unit’s amount carried against the amount that can be recovered. Impairment of loss is spotted when the former is greater than the latter. In US GAAP parlance, the loss of impairment is the amount of difference between the carried amount of goodwill and the reporting unit’s fair value that is implied. In terms of IFRS, it is the amount the former exceeds the amount that can be recovered. The loss thus arisen would be provisioned for Goodwill impairment until the latter is zero. Pros and cons of measuring Goodwill Impairment The measurement of goodwill has several positives aspects to it. ...
Download paper
Not exactly what you need?

Related Essays

Financial Reporting Research Project : Intangible Assets under U.S. GAAP and IFRS
Here, separable means selling, transferring, exchanging, renting and licensing. There is no contingency regarding they being separable or transferable. Similarly, the US GAAP categories of intangible assets: (1) Limited life intangible asset and (2) Indefinite life intangible asset. An intangible asset is an asset other than financial assets lacking physical appearance (SFAS 142 Glossary) and is separately distinguished from goodwill that is derived from any contractual or legal rights. These rights can be separated or transferred, sold, licensed, exchanged, rented. There is no contingency…
6 pages (1506 words)
Inventory and Fixed Assest
Inventory is categorized as a current asset in the balance sheet. Most manufacturing companies have large amounts of inventory. That inventory can go down in value for various reasons including technological advances. “Accounting Research Bulletin No. 43 (ARB No. 43) leads to an accounting valuation method known as the lower of cost or market, or LCM” (Accountingcoach, 2011). Based on ARB No. 43 the word market refers to the current replacement cost of the item. A concept related to the calculation of lower of cost or market is net realizable value (NRV). The net realizable value is…
4 pages (1004 words)
Financial Reporting Research
When making this decision, IAS 8.11 requires the management to show the definitions, recognition procedures, and dimension concepts for assets, incomes, liabilities, expenses and liabilities in the accounting Framework. A good financial statement is one that is understandable to every stakeholder of the company with minimum difficulties, thus financial statements should be simple and easy to understand. Two it should be reliable in that potential investors can rely on it to make decisions. Three it should be easy to compare with other financial statements in the market. Last but not least…
6 pages (1506 words)
annual report for Intercontinental Hotels Group plc for the year ended 31 December 2011.
$ in mn Revenue and Profits 2011 2010 % Inc. Sales 1768 1628 8.60 Operating profit 559 444 25.90 Exceptional items 35 15 133.33 Total operating profit 594 459 29.41 Profit before exceptional items 497 382 30.10 Tax -120 -98 22.45 Profit from continuing operations 377 284 32.75 Exceptional items 83 7 1085.71 Net profit including exceptional items 460 291 58.08 Financial position Good will and other intangible assets 400 358 11.73 Other non-current assets 1990 1952 1.95 Total non-current assets 2390 2310 3.46 Current assets 578 466 24.03 Total assets 2968 2776 6.92 Total current liabilities 860…
7 pages (1757 words)
Writing Assignment: Financial Analysis
Its mission is to enable people and businesses all over the world to be able to appreciate their full potential through the creation of technology that changes the way people communicate and work. The company is the leader in services, software, and solution that help individuals and companies realize their full potential. It has a strategic alliance with NIT Ltd, Dominion Enterprises, Inc, and Nokia. It develops supports and licenses software and products, and also deals with designing and selling computer hardware worldwide. The company’s windows line gives a personal computer operating…
8 pages (2008 words)
Finance and Accounting
It transforms how trade acquisitions are carried out and accounted for, and it also impacts economic statements from the date of completion of the acquisition. It further influences the yearly goodwill impairment test connected with acquisitions that closes both before and after the efficient date of this standard. A non controlling interest is the part of equity in a supplementary not attributable, indirectly or directly, to a parent company. The main objective of this statement is to recover the relevance, transparency, and comparability of the monetary information that a reporting unit…
4 pages (1004 words)
impairments of intangible (including goodwill).
Under the USA GAAP principle, the methodology used for the determination of the impairment of long lived assets is based on the two step approach. In the two steps approach, the first step requires test of recoverability. In this test, the comparison of the carrying amount and future amount of discounted cash flows from the using and disposing. In case, the assets are determined to be not recoverable than impairment testing conduct becomes mandatory. Contrary to this, in the IFRS system one step approach is employed. Under this system, the existence of the impairment indicators makes it…