Could someone who understands this create a impairment summary? For assets, equity accounting, goodwill, etc? Thanks
Long lived Assets:
IFRS
Compare to: Max(Sell price - Costs, PV of future CFs)
Impair to: Above, Loss in I/S
Revaluation possible up to previouse impairment
If revaluation greater than first book value record eccess goes in OCI
US GAAP
Compare to: Future undiscounted CFs
Impair to: Fair value, Loss in I/S
No revaluation possible
Inventory:
IFRS
Compare to: Sell - costs
Impair to: Above
Revaluation possible up to previouse impairment
US GAAP
No reval possible
Goodwill:
Both methods distribute their Goodwill to units, its on a by unit basis
IFRS
Compare to: Recoverable ammount
Impair to: Above
When Goodwill = 0, impair the unit to the extend of what haen’t been absorbed by the GW
US GAAP
Compare to: Fair price
Essentially same results except they are first calculating the implied GW from the Fair Price and then reducing the GW of the unit in respect.
Main difference is that the unit is not impacted if the GW = 0 (Might be why they follow this process which is essentially equal to the IFRS with the impairment limited to GW)
Have a very special saturday night,
A few additional points: US GAAP allows for revaluation when the asset is reclassified as held-for-sale.
For impairment in US GAAP, you use either the fair value (if given), or the PV of future cash flows.
For inventory, in US GAAP, the replacement cost is between the net realizable value (i.e. selling price - selling costs - completion costs) and NRV-profit margin.
For Goodwill, IFRS uses cash generating unit, while US GAAP uses reporting unit.
thank you… this saturday night, visions of impairment will circle in my head 