com/essays/accounting/accounting-goodwill.php Free Essays - Accounting Essays Accounting for Goodwill Under IFRS 3 In this essay I will be discussing the underlying problems with accounting for goodwill as a result of business combinations, which will include the comparison between the requirements of FRS 10 and IFRS 3 and also how this International standard affects the preparers and shareholders. IFRS 3 defines goodwill as: “future economic benefits arising from assets that are not capable of being individually
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Analyzation of General Motors Financials Prepared by: Cynthia Servison April 14, 2015 The amount of property and equipment on the balance sheet for the two most recent years are (dollars in millions) $27,743 (2014) and $25,867 (2013). Depreciation expense is (dollars in millions) $4,187 (2014) and $3,959 (2013). Amounts on the cash flow statement for depreciation is $8,067 (2014). Expenditure incurred on purchase of property, plant and equipment is called capital expenditure. Such an expenditure
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Implications and Consequences: +Provides an opportunity for earnings management. + Reflect the current period’s true and fair results. -Requirements for annual impairment testing of goodwill and other non-amortised intangible assets. -Difficulties surrounding the identification of a cash-generating unit. -Challenges in projecting cash flows and estimating various assumptions for the testing of value in use. Kolb’s TEL with Paul’s Critical Thinking Components: IAS 36 Impairment of assets-assess
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books of both the parent company and the subsidiary. 4. One reason a parent company may pay an amount less than the book value of the subsidiary’s stock acquired is a. an undervaluation of the subsidiary’s assets. b. the existence of unrecorded goodwill. c. an overvaluation of the subsidiary’s liabilities. d. none of these. 5. In a business combination accounted for as an acquisition, registration costs related to common stock issued by the parent company are a. expensed as incurred. b. deducted
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requirements for the business combination method I selected and how I determined goodwill was impaired and the financial impact of such impaired goodwill. The business combination method I selected is the acquisition method. Business combinations have implemented the newly created accounting treatment called the “acquisition method.” The major changes in the acquisition method include changes to fair value measurement, goodwill recognition, and non-controlling interests. In acquisition method, the
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clear about why you are asking for information on the following topics: * Adjusting lower cost of market inventory on valuation * Capitalizing interest on building construction * Recording gain or loss on asset disposal * Adjusting goodwill for impairment Recording Gain or Loss on disposal of Assets Any asset, such as land, a factory or equipment purchased by Evenbetternow, LLC for business purposes is called a capital asset. When a company disposes of capital assets, it is required
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lifespan, they show up on the balance sheet as long-term assets. III. IAS 38: Main Differences between IFRS and U.S. GAAP: Revaluations other than impairment considerations: Subsequent to their initial recognition, intangible assets (other than goodwill) may be revalued to fair value as an accounting policy election. However, because adoption of this election requires that fair value be determined by reference to an active market, it is rarely used. Internally developed intangible assets: Costs
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longer “recognize separately from goodwill (1) customer-related intangible assets unless they are capable of being sold or licensed independently from the other assets of the business and (2) noncompetition agreements.” This will cut down the complexity and cost while still providing interested parties with information to make decisions off of. #2 As we saw near the end of Chapter 1, the annual testing for impairment of indefinite life intangibles (such as goodwill) is VERY complicated (very quantitative)
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The characteristics of intangible assets are: (1) they lack physical existence, and (2) they are not a financial instrument. The most common types of intangibles reported are patents, copyrights, franchises, licenses, trademarks, trade names, and goodwill. Cost is the appropriate basis for recording purchased intangible assets. Like tangible assets, cost includes acquisition price and all other expenditures necessary in making the asset ready for its intended use—for example, purchase price, legal
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Because the market value of each company is less than its book value of its net assets, it fails the first step in the goodwill impairment test, an impairment should be recorded. A B C D E F G H (Columns C–D) (Columns B–F) (Columns D–G) Company Market Value Book Value (Net Assets) Carrying Value of Goodwill ROA Estimated Fair Value of Net Assets Implied GW (NA-Market Value) Goodwill Impairment Sprint Nextel $36,361 $51,271 $30,718 3.5% $20,553 $15,808 $14,910 Washington Mutual 11,742 23,941
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