December 3, 2015 Objectives of the Case: This case gives students the opportunity to apply the guidance in ASC 350 to determine: • What goodwill impairment indicators should be evaluated. • Whether an interim period step 1 impairment test should be performed Applicable Professional Pronouncements: ASC 350-20, Intangibles — Goodwill and Other: Goodwill (ASC 350-20) ASC 820, Fair Value Measurement (ASC 820) Research Databases: Use the FASB Accounting Standards Codification Database to
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Chapter 12 Intangible Assets Lack physical substance (patents, copyrights, franchises, licenses, trademarks, trade names, goodwill) They are NOT financial instruments (A/R, notes and bonds receivable,….ect.) Valuation: Record at cost (everything necessary to make asset ready for intended use). For internally-generated intangibles, only direct costs are capitalized (e.g., legal costs for patent). If insignificant cost, then usually expensed. Amortization:*
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McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2009 Hoyle, Schaefer, Doupnik, Advanced Accounting, 9/e 3-1 CHAPTER 3 CONSOLIDATIONS—SUBSEQUENT TO THE DATE OF ACQUISITION Answers to Discussion Questions How Does a Company Really Decide which Investment Method to Apply? Students can come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the method of accounting for its subsidiary, Crestwood Corporation. The following is simply a partial
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CHAPTER 3 CONSOLIDATIONS—SUBSEQUENT TO THE DATE OF ACQUISITION Answers to Discussion Questions How Does a Company Really Decide which Investment Method to Apply? Students can come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the method of accounting for its subsidiary, Crestwood Corporation. The following is simply a partial list of possible points to consider. Use of the information. If Pilgrim does not monitor its own income levels closely
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interest properly during a construction project can save money. When putting an asset to rest its important to portray accurately the loss or gain. When thinking about expanding by acquiring an existing business it is important to know how to adjust goodwill for impairment. Lower of Cost or Market Value A requirement of U.S. GAAP is that inventory is recorded at the lower of cost to produce it, repurchase it or the market value of the inventory (Investopedia, 2009). This principle affects
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Clients Understanding Binu David, Dana Blacks, and Deborah Stuker ACC541 University of Phoenix Prof. JoEtta Lower cost of Market method can be used to avoid overstatement and understatement of the inventory. Prices of inventory after purchase can fluctuate, so listing the actual purchase price wouldn’t be accurate. By using the replacement cost in comparison to the price ceiling and price floor, a more accurate picture can be developed. The price ceiling is the highest the price that should
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registrants, its activities are ongoing. For more information, refer to our IFRS Resource Center. The guidance related to accounting for the impairment of goodwill and indefinite-lived intangible assets in U.S. GAAP is included in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, Intangibles—Goodwill and Other, and the guidance related to accounting for the impairment or disposal of other longlived assets in U.S. GAAP is included in FASB ASC Topic 360
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Chapter 3 Consolidations – Subsequent to the Date of Acquisition Chapter Outline I. Consolidation — the Effects Created by the Passage of Time A. The present chapter examines the consolidation procedures that must be followed in subsequent periods whenever separate incorporation of the subsidiary is maintained. B. Purchase combinations will continue to require a different set of procedures than a pooling of interests because of allocations and
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the Goodwill booked on the Balance Sheet is not subject to amortization but must also be adjusted if necessary for possible impairment of value as well. Accounting for goodwill is not the same as accounting for other intangible assets. Unlike other intangible assets, it cannot be amortized. Amortization and depreciation are closely related. There is no lifetime for goodwill and a company can only receive goodwill if they have purchased a company for a premium. They can also develop goodwill with
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Accounting Seminar II DQs Chapter 2: 8 First Morgan Company will find the fair value of Jennings, Inc and the fair value of the stock shares. The excess if recorded as goodwill. Because dissolution will occur, Jennings’ asset and liability accounts are transferred to Morgan and entered at fair value with excess recorded to goodwill (Doupnik, Hoyle & Schaefer, 2011). Chapter 2:9 A bargain purchase gain will be recognized when the asset is purchased at less than the fair value. The acquisition
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