(GAAP) it is necessary that I review the current practices being used by your organization with regards to lower of cost or market valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting for goodwill impairment. It is important for me to know that you and your organization understand the importance of understanding how these issues affect the reliability of your financial statements. I will briefly explain the impact and shortcomings that each
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with tangible assets such as cash, inventory, investments, receivables, property, plant, and equipment. What go unrecorded are intangible assets such as quality of management, customer loyalty, information infrastructure, trade secrets, patents, goodwill, research, and, considered by some, the ultimate intangible, knowledge—a company’s intellectual capital. FASB chairman Edmund Jenkins attests, “The components of cost in a product today are largely R & D, intellectual assets, and services.” Professor
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When should an entity conduct an impairment test? (2 Marks) The following assets require an impairment test every year: • Intangible assets with indefinite useful lives • Intangible assets not yet available for use • Goodwill acquired in a business combination The impairment test is undertaken when there is indication that an asset may be impaired. This means that, at the end of each reporting period, an entity has to test for the probability that an asset has
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Contents Table of Contents…………………………………………………………………………………..page 2 Introduction…………………………………………………………………………………………..page 3 Amortization and Depreciation………………………………………………….…………..page 3-4 Intangible Assets………………………………………………………………………..………….page 4-5 Goodwill……………………………………………………………………………………………..….page 5-6 Impairment…………………………………………………………………………………………….page 6 Liabilities………………………………………………………………………………………………..page 6-7 Interest and Bonds…………………………………………………………………………………page 7-8 Leases……………………………………………………………………………………………………
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Buffett Essays Summary Ch1 Corporate Governance 2 Ch2 Finance and Investing 5 Ch3 Investment alternatives 8 Ch4 Common stock 11 Ch5 Mergers and acquisitions 14 Ch6 Valuation and accounting 17 Ch7 Accounting shenanigans 19 Ch8 Accounting policy 21 Ch9 Tax matters 23 Ch1 Corporate Governance Mr. Buffett mentioned some problems existing in annual meetings and possible causes. In most situations, annual meetings are a kind of time waste for shareholders and management, because
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testing, goodwill associated with the Spanish operations impairs under GAAP as of 12/31/2010. The impairment loss is $200,000. Under U.S.GAAP, goodwill impairment test is taken annually, or when there is impairment indicator. B. After the impairment testing, goodwill associated with the Spanish operations impairs under IFRSs as of 12/31/2012. The impairment loss is $400,000. The new carrying value of the assets is $3.1 million. The new carrying value of the CGU is $1.8 million. Goodwill acquired
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assumes ideal conditions. Market value of firm = NBV of firm’s net assets + expected PV of future abnormal earnings (goodwill) .’. can read firm value directly from B/S. Key Points: 1) Actual earnings are based on “clean surplus” -> ensures that all gains or losses go through the I/S. Means that the gain/loss impact of fair values is recognized in earnings. 2) Goodwill is calculated as the difference b/w actual and expected earnings (same concept as abnormal earnings) 3) Expected earnings
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to account for them Understand a special case of intangible – research and development, and how to account for them Understand a special case of intangible – goodwill, and how to account for them 2. 3. 3 A/Professor Indra Abeysekera 1 2/08/2013 Definition of intangible assets ………………………………………. Includes patents, goodwill, mastheads, brand names, copyrights, research and development, and trademarks The lack of physical substance does not preclude an item from being considered to
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it easier the transaction. Google acquired Motorola Mobility for $12.5 billion. Nevertheless, is important to say that the estimated worth of the patents portfolio was less than half Google’s purchase price ($5.5billion). 4. Did Google pay any goodwill? From the purchase price mentioned above, $5.5 billion were used for purchasing Motorola's patent
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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
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