The impairment of a fixed asset can be described as an abrupt decrease infair valuedue to physical damage, changes in existing laws creating a permanent decrease, increased competition, poor management, obsolescence of technology, etc. In the case of a fixed-asset impairment, the company needs t...
In the U.S., generally accepted accounting principles (GAAP) require companies to review their goodwill for impairment at least once a year at a reporting unit level. Catalysts for goodwill impairment include increased competition, economic deterioration, loss of key personnel, and regulatory action...
A write-down impacts both theincome statementand thebalance sheet. A loss is reported on the income statement. If the write-down is related to inventory, it may be recorded as acost of goods sold (COGS). Otherwise, it is listed as a separate impairment loss line item on the income stat...
A determination by the former Accounting Principles Board regarding the way a certain financial transaction is to be treated for reporting purposes. For example, APB Opinion 15 sets forth the ways in which convertible issues and common-stock equivalents are to be used in calculating earnings per sh...
Impairment in Accounting | Definition & Examples Tangible Assets | Definition, Types & Examples Long Term Assets | Definition, Types & Examples Identifying & Classifying Intangible Assets & Goodwill Impairments Carrying Amount of Goodwill & Indefinite-Lived Intangible Assets: Calculation & Records Capital...
Accounting elements are the concretion of accounting objects, the cornerstone of accounting basic theory research, and the core of accounting standards construction. Whether the definition of accounting elements is scientific and reasonable directly affe
acquired and recorded on the books when an acquirer purchases a target for more than the fair market value of the target’s net assets (assets minus liabilities). Per accounting standards, goodwill is recorded as an intangible asset and evaluated periodically for any possible impairment in value...
The impairment amount of a loan is defined in mathematical terms. The lender calculates this amount by subtracting the amount expected to be recovered on the loan from the initial book amount of the loan. For example, if a lender issues a mortgage for $500,000 but expects to recover only ...
Overhead costs, on the other hand, remain relatively stable regardless of production volume, especially fixed overhead costs like rent or equipmentdepreciation. 3. Role in Cost Accounting Direct costs are used to calculate thecost of goods sold (COGS), a key metric for understanding the profitabi...
Thus, an auditor who is testing a validity assertion regarding a company's fixed assets could conduct a physical observation of the assets, and then test for record accuracy by evaluating whether there is an asset impairment. Substantive procedures are included in the audit plan around which an ...