...Eagle Impairment Case The following report outlines an analysis of Eagle Company’s assets in Serbia and Italy. With the information provided, we have created a detailed report to assess which assets should be impaired along with its impairment value under the IFRS and US GAAP standards. Eagle in Italy Under IFRS: Eagle owns a commercial building in Italy. The carrying amount is $1,100 with $900 being the value in use. According to IAS 36 P18, “An asset is impaired when its carrying amount exceeds its recoverable amount.” In this case, the carrying amount ($1,100) exceeds the recoverable amount (Higher of Value in use) of $900. Eagle should report an impairment loss of the difference of the carrying amount and the value in use: $1,100 - $900 = $200,000. Eagle should report an impairment loss of $200,000 for their cash-generating unit (CGU) in Italy. Under US GAAP: According to US GAAP, if the undiscounted future cash flows ($1,150) exceeds the carrying amount ($1,100), then no impairment loss is recorded. Since that is the case, under US GAAP, Eagle should not report an impairment loss on their CGU. Eagle in Serbia Under IFRS: Eagle acquired a smaller competing company in 2011 in Serbia; goodwill was allocated to the CGU. The guidelines for determining whether an impairment loss is recorded are the same as the scenario for Eagle in Italy, “An asset is impaired when its carrying amount exceeds its recoverable amount.” The fair value of the PP&E was $1 million...
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...Case 10-2 Eagle Impairment Loss Eagle Company (Eagle) is a manufacturing company with operations in Italy and Serbia. Eagle in Italy: In addition to other assets, Eagle owns and operates a commercial building in Italy that is carried at its cost less any accumulated depreciation and any accumulated impairment losses. The building represents a cash-generating unit (CGU) for which the following information is available as of December 31, 2010: Building 12/31/10 in thousands  Carrying amount  $1,100  Value in use   900  Fair market value less costs to sell 800  Fair market value  850  Undiscounted future cash flows 1,150  Eagle in Serbia: In Serbia, in 2008, Eagle acquired a smaller competing company and goodwill was allocated to the CGU shown below. Activities in Serbia represent the lowest level at which internal management monitors goodwill. At the end of 2008 and 2009, the value in use of the CGU including goodwill exceeded its carrying amount. Therefore the activities of Eagle in Serbia and the goodwill allocated to those activities were regarded as not impaired. However, at the end of 2010, the newly elected government passed legislation significantly restricting exports of Eagle’s main product. The information below relates to the CGU (which includes goodwill) of Eagle’s operations in Serbia before the impairment analysis is performed. For this case, assume the basis of segmentation for CGUs and reporting units (RU) is the same under...
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...The case begins with describing Eagle impairment, which is a manufacturing company, which has operations in Italy and Serbia. In Italy Eagle owns and operates a commercial building that is carried at its cost less depreciation. The case then gives us a chart which shows us Cash generating unit that includes: carrying amount $1,100, value in use 900, fair market value less costs to sell 800, fair market value 850, and undiscounted future cash flows 1,150 all in thousands. Eagle’s manufacturing company in Serbia attained a smaller competing company. The activities in Serbia are regarded as not impaired because the value in the use of CGU including goodwill exceeds its carrying amount. By the end of 2010 the govt passed a legislation drastically restricting exports of eagle’s main merchandise. The CGU in the end of 2010 was altered because of the new legislation, which included: cash $50, property plant and equipment 1,100, land 150, goodwill 300, total assets 1,600, liabilities (200), and carrying value 1,400 all in thousands. The case goes on to show us a 5 year business forecast of Eagle Impairment. It reflects an increase in the amount of capital expenditures in order to modify Eagle’s mail product. Eagle uses straight line depreciation and anticipates no residual value. 1. I assume the commercial building meets the requirements for a recoverable test under IFRS. The carrying value is $1,100 whci is greater than the claue in use which is $900. The fair market value less...
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...Eagle Impairment Loss Eagle Company (Eagle) is a manufacturing company with operations in Italy and Serbia. Eagle in Italy: In addition to other assets, Eagle owns and operates a commercial building in Italy that is carried at its cost less any accumulated depreciation and any accumulated impairment losses. The building represents a cash-generating unit (CGU) for which the following information is available as of December 31, 2010: Building | 12/31/10 inthousands | Carrying amount | $1,100 | Value in use | 900 | Fair market value less costs to sell | 800 | Fair market value | 850 | Undiscounted future cash flows | 1,150 | Eagle in Serbia: In Serbia, in 2008, Eagle acquired a smaller competing company and goodwill was allocated to the CGU shown below. Activities in Serbia represent the lowest level at which internal management monitors goodwill. At the end of 2008 and 2009, the value in use of the CGU including goodwill exceeded its carrying amount. Therefore the activities of Eagle in Serbia and the goodwill allocated to those activities were regarded as not impaired. However, at the end of 2010, the newly elected government passed legislation significantly restricting exports of Eagle’s main product. The information below relates to the CGU (which includes goodwill) of Eagle’s operations in Serbia before the impairment analysis is performed. For this case, assume the basis of segmentation for CGUs and reporting units (RU) is the same under IFRSs and...
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...Case #2 Murong Feng, Duy Do, TJ Fritzgerald, Hayden Jacobs 2/13/15 Question 1 Given the facts provided for Eagle in Italy, the building is not impaired under IFRS as of December 31, 2010. The carrying value is 1,100,000, and undiscounted future cash flows are 1,150,000. The carrying value is less than undiscounted future cash flows. According to IAS36 paragraph 12, “in assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications: (d) the carrying amount of the net assets of the entity is more than its market capitalization.” Thus, there is not any impairment on the building under IFRS. Question 2 Given the facts provided for Eagle in Italy, the building is impaired under U.S. GAAP as of December 31, 2010. Under ACS 360-35-17, “An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset” In the case, the carrying value is 1,100,000, and the fair value is 850,000. The carrying value is more than its fair value, an impairment should be recognized. However, it is recoverable since its carrying value is less than undiscounted future cash flows. In ASC 360-35-17 “An impairment loss shall be measured as the amount by which the carrying value...
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...Case 10-2 Eagle Impairment Case Question #1 Under IFRS’ International Account Standard No.36^15 an asset must be assessed for indicators of impairment at the end of each reporting period. The information provided for the commercial building in Italy does not say whether there are is an event or change in circumstances that indicate that book value of the asset may not be recoverable. Since there is no indicator mentioned, one possibility would be that no investigation of impairment take place and there is no impairment loss. It is more likely however that there are indicators that have occurred, they just aren’t identifiable from the information given. If there were indicators and impairment was tested there is no recoverability test under IFRS. An impairment loss is recognized when an asset’s book value exceeds the higher of the asset’s value-in-use or fair value less costs to sell. For Italy’s commercial building the book value is $1,100,000, the value-in-use is $900,000, and the fair value less costs to sell is $800,000. Since the commercial building’s book value is higher than the value-in-use an impairment would be recognized as the difference between book value and the recoverable amount (value-in-use in this situation). So an impairment loss would be recognized for $200,000($1,100,000- $900,000). Question #2 Under U.S. GAAP, assets are tested for impairment when events or changes in circumstances indicate that book value may not be recoverable. For the building in...
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...Case 2: Eagle Impairment Loss 1. We have referred to IAS 36 to make the decision on the amount that should be impaired by Eagle in Italy. Since in the case it says that there are qualitative factors that suggest an impairment is likely, we have to evaluate based on the recoverability test. IAS claims that we can recognize an impairment loss under the following circumstances: “If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss.”(IAS36-59). To be able to determine the amount impaired, we have to find the definition of recoverable amount. On Page 13 in IAS 36, the recoverable amount of an asset is, “the higher of its fair value less costs to sell and its value in use. (P-13 IAS 36) So, the impairment loss is 1100, 000-900,000=200,000 2. According to the FASB, “An impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value.”(360-10-35-17) However, in this case the recoverable costs is 1,150,000 which is larger than the carrying value 1,100,000. Thus, we do not need to record the impairment loss under GAAP. 3. Part 1 IFRS Under IFRS, “A cash-generating unit to which goodwill has been allocated shall be tested for Impairment annually, and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the...
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...He recalled that there was a time when his seventy-three year old dad came over to his house, and Johnson had his son help out his grandfather. As Brad was walking down the steps one at a time with two feet, his son told him that he was moving the exact same way as his father. Not only was the grandfather older but he also had a bad knee. Despite Brad being half his father’s age, he moved as if he were in his seventies as well. That was a major eye opener for Brad. He began to fully realize by his decision of continuing to play after he was told to end his career, the toll he paid on not only his body, but his mentality. Concussions in the NFL take several approaches, one of which is the approach of the conflict theory. It is based on cases where players sue the NFL for not properly treating and caring for it, as well as the debatably issue itself. The former players (the social group) argue that those who suffered the worst head trauma should sue the NFL and then receive a payout. The second approach is the functionalist perspective. It would be used when former NFL players with brain damage deal with their mental illnesses in their own specific way, but still keep true to the fact that they have an inner instability. They must also be not afraid to display socially some of those instabilities in way that is minor to the NFL. Finally, the last approach is the Interactionalist theory. This takes to this approach for the reason that it states that former players with brain...
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...For the exclusive use of D. Xiang, 2015. 9-200-044 REV: JANUARY 15, 2002 LISA MEULBROEK Kmart Inc. and Builders Square Introduction In July 1997, Kmart appeared to be nearing a year-long effort to sell its faltering Do-It-Yourself (DIY) home improvement chain, Builders Square. Leonard Green & Partners, a Los Angeles-based retail buyout firm, had proposed to buy Builders Square (BSQ) and merge it with Hechinger’s, a Washington, D.C.-based DIY chain that had been a pioneer in the retail home improvement industry. The newly-formed Builders Square-Hechinger combination would create the nation’s third largest DIY retailer, and seemed to be one of the few options left to Kmart. Kmart’s CEO, Floyd Hall, had a difficult decision to make: should he move forward with Green’s offer of $10 million for Builders Square, or should he continue the search in hopes of receiving a higher offer? Green’s offer seemed surprisingly low, even given Builders Square’s recent sub-par performance, yet bidders for Builders Square had been slow to materialize. Indeed, Kmart’s recent talks concerning a joint venture with Waban Co.’s HomeBase centers ended when Waban’s management withdrew without explanation. As the decision neared, Kmart’s options seemed limited and time was short. Kmart and its Entry into Specialty Retailing Kmart Corporation, one of the world’s largest mass merchandise retailers, began as the S.S. Kresge Company in 1912 and by the 1950s it was one of the largest...
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... Q1-1 Complex organizational structures often result when companies do business in a complex business environment. New subsidiaries or other entities may be formed for purposes such as extending operations into foreign countries, seeking to protect existing assets from risks associated with entry into new product lines, separating activities that fall under regulatory controls, and reducing taxes by separating certain types of operations. Q1-2 The split-off and spin-off result in the same reduction of reported assets and liabilities. Only the stockholders’ equity accounts of the company are different. The number of shares outstanding remains unchanged in the case of a spin-off and retained earnings or paid-in capital is reduced. Shares of the parent are exchanged for shares of the subsidiary in a split-off, thereby reducing the outstanding shares of the parent company. Q1-3 The management of Enron appears to have used special-purpose entities to avoid reporting debt on its balance sheet and to create fictional transactions that resulted in reported income. It also transferred bad loans and investments to special-purpose entities to avoid recognizing losses in its income statement. Q1-4 (a) A statutory merger occurs when one company acquires another company and the assets and liabilities of the acquired company are...
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A business typically...
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A...
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...Chapter 01 - Financial Statements and Business Decisions Chapter 01 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and...
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...UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-5424 DELTA AIR LINES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) Post Office Box 20706 Atlanta, Georgia (Address of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered 58-0218548 (I.R.S. Employer Identification No.) 30320-6001 (Zip Code) Registrant’s telephone number, including area code: (404) 715-2600 Common Stock, par value $0.0001 per share New York Stock Exchange No Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the...
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...The Boeing Company 2010 Annual Report At Boeing, we aspire to be the strongest, best and best-integrated aerospace-based company in the world — for today and tomorrow. The Boeing Company Boeing is the world’s largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems. A top U.S. exporter, the company supports airlines and U.S. and allied government customers in more than 90 countries. Our products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. With corporate offices in Chicago, Boeing employs more than 160,000 people across the United States and in 70 countries. Our leadership is strengthened further by hundreds of thousands of people who work for Boeing suppliers worldwide. Contents Operational Summary Message From Our Chairman The Executive Council Financial Results Form 10-K Selected Programs, Products and Services Shareholder Information Board of Directors Company Officers 1 2 7 8 9 134 141 142 142 Cover photo: 787 Dreamliner in flight test Photo above: F/A-18E/F Super Hornet strength Operational Summary Q Earned net income of $3.3 billion, or $4.46 per share, compared with $1.3 billion, or $1.87 per share, in 2009. Q Delivered 115 production military aircraft, two launch vehicles and four satellites, and increased backlog...
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