资产减值相关论文外文文献

impairment of assets我有标准版的“FASB 144”号文件 US关于减值的标版规定[转摘]: 144 Impairment of AssetsAssets held for useIncludes land, building, equipment, natural resources, and intangible assetsFASB 147 specifies that intangibles from the banking industry are covered by FASB 144 rules:Long-term customer relationship assets such asDepositor-relationships intangible assetsBorrower-relationships intangible assetsCredit card holder Intangible assetsWhen should impairment be recognized?Testing each asset each period would be too costlyEvents or changes in circumstances indicate that its carrying amount may not be recoverableTRIGGERING EVENTS:Decline in market valueChange in way asset is used or physical change in assetAdverse changes in legal factors or business climateAccumulated costs in excess of amounts originally expected to construct or acquire assetCurrent expectation that, more likely than not, a long-lived asset will be sold or disposed of significantly before the end of its previously estimated useful lifeCurrent period losses with history of operating or cash flow losses associated with assetTo apply impairment testsA long-lived asset shall be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and asset approachFASB 144 establishes a "primary-asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and usedGoodwill is included in the asset group only if the asset group is a reporting unit (defined in FASB 142)Other assets and liabilities (inventory, accounts payable, long-term debt, etc) are to be properly valued in accordance with GAAP prior to testing the asset group for recoverabilityAn impairment loss is recognized if . . .Carrying amount of asset (book value) is greater than undiscounted future cash flows related to use and disposal of assetIn other words, the carrying value is not recoverableNote that an impairment can exist (that is, carrying value can be less than fair value) but it is not recognized as long as the future cash flows (undiscounted) are greater than the carrying asset is written down to fair valueThe fair value becomes the new carrying value (book value) and depreciation is recorded over remaining useful lifeRestoration of a previously recognized impairment loss is fair valueFASB 144 describes a probability-weighted cash flow estimation approach to deal with situations in whichalternative courses of action to recover the carrying amount of a long-lived asset are under consideration, ora range is estimated for the amount of possible future cash flowsAssets to be Sold vs. AbandonedNew rules in FASB 144 distinguish between assets to be sold and those to be abandoned, exchanged or spun-offProblems with FASB 121Under the old rules, there were two possible valuation proceduresNet realizable valueFair value less cost to sellThe effect was to recognize future operating lossesFASB decided that this violated the definition of a liabilityLong-lived assets to be disposed of by saleClassified as “held for sale” in period in which all of the following criteria are met:1. Management commits to a plan to sell the asset2. Asset is available for immediate sale in its present condition3. Active program to locate a buyer has been initiated4. Sale is probable within one year5. Asset is being actively marketed for a reasonable price6. It is unlikely that the plan to sell will be changedMeasurementWrite asset down to the LOWER ofCarrying amountFair value less cost to sell (see definitions below)Stop depreciating the assetCosts to sellIncludes incremental direct costs to transact the saleBroker commissionsLegal & title transfer feesClosing costsGenerally does not include costs to protect or maintain assetInsuranceSecurity servicesUtility expensesThe cost to sell are discounted to present in special circumstances when the sale is more than one year in the futureAssets to be disposed of other means• Situations include:– Abandonment– Exchange for similar productive asset– Distribution to owners in a spinoff• The asset shall continue to be classified as “held and used” until it is disposed ofAssets to be disposed of other means• Asset stays in PP&E– Depreciation estimates should be revised to reflect shortened life• Depreciation ends and a gain or loss is recorded when the property is “disposed of”The “disposed of” date:• Abandoned– The date it ceases to be used• Exchanged or distributed to owners through a spinoff– The date when it is exchanged or distributedImpairment Example 1Johnson Company purchased equipment 8 years ago for $1,000,000. The equipment has been depreciated using the straight-line method with a 20-year useful life and 10% residual value. Johnson's operations have experienced significant losses for the past 2 years and, as a result, the company has decided that the equipment should be evaluated for possible impairment. The management of Johnson Company estimates that the equipment has a remaining useful life of 7 years. Net cash inflow from the equipment will be $80,000 per year. The fair value of the equipment is $240,000. No goodwill was associated with the purchase of the equipment.(a) Determine if an impairment loss should be is the book value of the asset?(We need to first figure out how much is in accumulated depreciation.)What are the projected cash flows from asset?(b) Determine the amount of the loss and prepare the journal entry to record the Credit(c) What journal entry should Johnson Company make if future cash flows related to the equipment were $980,000 in total?Debit CreditImpairment Example/Homework 2Howard Company purchased a manufacturing facility 8 years ago on January 8, 1994 for $10,000,000. The facility has been depreciated using the straight-line method with a 20-year useful life and 10% residual value. Howard’s operations have experienced significant losses for the past 2 years and, as a result, the company has decided that the facility should be evaluated for possible impairment at December 31, 2001. The management of Howard Company estimates that the facility has a remaining useful life of 7 years. Net cash inflow from the facility will be $800,000 per year. The fair value of the facility (using present value techniques) is estimated to be $3,400,000. No goodwill was associated with the purchase of the equipment.(a) Determine if an impairment loss should be recognized.(b) If appropriate, determine the amount of the loss and prepare the journal entry to record the Co. - Impairment of Assets Example 1 – solution(a) Annual depreciation for the equipment has been $45,000 ($1,000,000 - $100,000)/20 years. Current book value of the equipment is:Original cost ........................................ $1,000,000Accumulated depreciation ($45,000  8 years) ......... 360,000Book value ........................................... $ 640,000According to FASB 144, the existence of impairment is determined by comparing book value of $640,000 to the undiscounted future cash flows of $560,000. The fair value is lower, so an impairment loss should be recognized.(b) The impairment loss is equal to the $400,000 ($640,000 - $240,000) difference between the book value of the equipment and its fair value. The impairment loss would be recorded as follows:Debit CreditAccumulated Depreciation--Equipment ........ 360,000Loss on Impairment of Equipment ............ 400,000Equipment ($1,000,000 - $240,000) ........ 760,000(c) Since the future cash flows (undiscounted) equal $980,000 and this amount is greater than the book value of $640,000, Johnson Company will not do anything. No impairment is recognized and no upward revaluation is recorded.