This website uses cookies to ensure you have the best experience. Learn more

Advanced Financial Accounting 260 Essay

1252 words - 6 pages

ADVANCED FINANCIAL ACCOUNTING 260
IMPAIRMENT
QUIZ QUESTIONS

1. 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 been impaired. An entity, therefore, has to determine after analysing certain sources of information whether there is sufficient ...view middle of the document...

5. What is an impairment loss? (1 Mark)
An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount.

6. What is a cash-generating unit? (1 Mark)
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.

7. How are corporate assets tested for impairment? (2 Marks)
Step 1: If corporate assets can be reasonably and consistently allocated to CGUs, then this is done.
Step 2: If corporate assets cannot be reasonably allocated to CGUs, the entity needs to identify the smallest and largest CGUs and allocate any impairment loss across individual assets including corporate assets in accordance with Para 102 of IAS 36.

8. Supersatumas grows citrus fruit on a number of orchards in the Perth Hills. This fruit is then processed into fruit juice and other products at their cannery. These products are then sold to the public via their chain of Jucymarket stores. How many cash generating units would the company have? Why? (2 Marks)
Two, The key to identify CGU is to determine the ‘smallest identifiable group of assets’ and this group must create ‘independent cash flows’ from continuing use. this fruit is then processed into fruit juice and other products at their cannery. The operation of the two seperate processes are independent. Therefore, it is likely that individual process generate cash infows that are largely independent of each other and that each process is a separate cash-generating unit. So there are two CGUs of the company.

9. In allocating an impairment loss for a cash generating unit which of the following assets would not be given a portion of the loss – land; machinery; inventory; manufacturing licence; receivables? Why? (1 Mark)
Inventory--- It is measured at the lower of cost and net realisable value. As net realisable value is defined in terms of estimated price, the measurement of inventory has an in-built impairment test requiring inventory to be written down when the cost is effectively greater than the recoverable amount.
Receivables--- It is recorded at fair value which reflects recoverability of benefits from the asset.

10. In allocating an impairment loss for a CGU the carrying amount of any individual asset must not be reduced below what figure? (1 Mark)
The carrying amount cannot be reduced below...

Other Papers Like Advanced Financial Accounting 260

Harvard Case Essay

4210 words - 17 pages its annual and interim reports financial statements purportedly prepared in accordance with both U.S. and Canadian generally accepted accounting principles (GAAP). ________________________________________________________________________________________________________________ Craig Chapman, Senior Lecturer, Kellogg School of Management, prepared this case specifically for the Harvard Business Publishing Brief Case Collection. This case was

Annual Report

3560 words - 15 pages BUSN7050 Corporate Accounting Lecturer: Dr Sorin Daniliuc Course details • This course covers: – the characteristics of the Australian accounting environment and its financial reporting requirements for companies – accounting for owners’ equity (share capital and reserves) – accounting for liabilities (with a focus on debentures) – accounting for income tax – accounting for leases – accounting for non-current assets (revaluation

Intangible Assets Quiz Financial Accounting

973 words - 4 pages ADVANCED FINANCIAL ACCOUNTING 260 INTANGIBLE ASSETS QUIZ QUESTIONS 1. List two assets which would not meet the ‘identifiable’ aspect of the definition of an intangible asset. (2 Marks) Customer loyalty Relationship with suppliers 2. Intangible assets acquired via a separate acquisition are always recognised. Why? (2 Marks) The price an entity pays to acquire an intangible asset will reflect expectations about future economic

Financial Statement Restatment Paper

553 words - 3 pages Financial Statement Restatement Paper ***** ****** ACC/537 January 13, 2014 Financial Statement Restatement Paper MicroStrategy, Inc. went public in June 2008. It is a software company that had been identified as, “a successful, growing company with positive net income” (Krishnan & Mintz, 2007). Like many managers, the managers at MicroStrategy, Inc. wanted to make a quick profit by using aggressive accounting techniques that

Statement of Purpose

683 words - 3 pages Statement of Purpose of Zhe Pei I am writing to share with you my interest in applying for the MBA program at Redlands University in order to more deeply explore the best practices of accounting and business methods used in this field. After careful consideration, it has become clear to me that developing a successful career in accounting in the modern business environment requires advanced training in accounting and related subjects. Having

Guide to Aat

3248 words - 13 pages around 130,000 members in more than 90 countries. Time Management Working in accounting 3 2016 *Bureau of Labor Statistics Salary: £15,000 £50,000+ Typical Hours: 30-40 per week Accounting jobs are predicted to grow by 13% by 2022* Accountancy is among the world’s most stimulating, exciting and rewarding professions. It’s at the heart of every modern business, from sole traders to multinationals, and people with the right financial skills

592 Syllabus

2847 words - 12 pages COURSE OBJECTIVES Financial and management accounting are more closely linked in practice than one might expect from reading traditional textbooks and the problems to be resolved often have income tax and auditing consequences as well. This seminar is designed to provide you with opportunities to apply general concepts and principles learned in intermediate and advanced financial accounting courses to new economic transactions and business

Transfer

303 words - 2 pages Program | Community College minimum required cumulative average for consideration: | University minimum required cumulative average for consideration: | Notes: Transfer credits upto 1 year | | | | | Bachelor of Commerce | 75% | 70% | In addition, applicants must present 4U English and Advanced Functions for all majors, plus one additional 4U math (or equivalent) when applying to Accounting, Food and Agricultural

Business Administration

541 words - 3 pages Accounting for Business Decisions Semester B Analysing Financial Information Financial Management Human Resource Management Semester A Labour Market Policy Organisational Psychology Semester B Cross-cultural Management Individual Employment Law Marketing Semester A Marketing Planning 21st Century Consumer Marketing Semester B Marketing for the Small Enterprise Cross-cultural Management Management Semester A

Economic Consequence Consideration

1342 words - 6 pages Economic Consequence Consideration ATG 563 - Advanced Accounting Theory February 14,2012 Should economic consequences be considered by the FASB in the accounting standard setting process? Yes, the FASB should consider economic consequences in the accounting standard setting process. Ever since the creation of the FASB in 1973, it was charged with establishing standards of financial accounting and reporting in the most efficient and complete

Biovail Case

2643 words - 11 pages which target by $260 million is because of the truck accident happened that contributed a significant unfavourable variance where the company estimated that revenue of the truck that involved in accident was in the range of $10 million to $20 million. There are several issues that addressed in this case which included accounting policy based on the revenue recognition; how Biovail Corporation should account the sales based on two different

Related Essays

Standard Accountin Auditing Essay

1973 words - 8 pages , which are currently examinable in the Institute’s examination, are set out below. I. Approved Accounting Standards The Companies Act 1965 requires that approved accounting standards are to be applied to the financial statements of all companies. Approved accounting standards are issued by the Malaysian Accounting Standards Board (MASB), which is established under the Financial Reporting Act 1997. For the purposes of the MICPA pronouncements are

Accounting Standards Boards Essay

1073 words - 5 pages Accounting Standards Boards Brian Joseph Stevens ACC/541 September 29, 2010 Heber W. Howard, Certified Public Accountant (CPA) Accounting Standards Boards In this paper I will address two main topics beginning with the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) history, relationship, and cooperative efforts on the convergence project and then transition into how the Master of

Accural Method Essay

419 words - 2 pages Michael Simonds HSM/260 Accrual Method The Accrual Method is a major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out. This contrasts to the other major accounting method, accrual accounting, which requires income to be recognized in a company's books at the time the revenue is earned (but not necessarily received) and records expenses when liabilities are incurred (but

Development Of Accounting Essay

4609 words - 19 pages . Remi, A., (2006), Advanced Financial Accounting, Second Edition, Lagos Master Stroke Consulting. Robert O.I. (1999), Financial accounting Made Simple, Lagos, ROI Publishers. Stoner J, Freeman R. and Gilbert, D. J. (2002), Management, Sixth Edition, India, Prentice Hall. Wolk H. I, Dodd J. L and Rozycki J. J (2008). Accounting Theory: Conceptual Issues in a Political and Economic Environment, 7th edition, Sage Publications Inc. California. 10