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LinkedIn Learning

Accounting Foundations: Asset Impairment

via LinkedIn Learning

Overview

Learn how to account for long-term assets on the balance sheet through asset impairment.

Goodwill, accounts receivable, and other long-term assets often have a market value that is less than the book value, or cost, of the asset. In this course, you can learn how to account for this on the balance sheet through asset impairment. Working with impaired assets also requires understanding how to value those assets from year to year and audit the reported value. This course covers all the aspects of identifying, reporting, and auditing the acquisition, depreciation, and impairment of tangible and intangible assets. Plus, learn about the option for upward revaluation—write-up—available under the International Financial Reporting Standards rules.

Syllabus

Introduction
  • How impaired assets impact the balance sheet
1. Accounting for the Acquisition of Tangible and Intangible Assets
  • Recording the purchase of a sports franchise
  • A basic purchase
  • A basket purchase
  • Acquiring an entire business
2. Depreciation, Amortization, and Depletion
  • The old Blockbuster Video case
  • Straight-line depreciation and book value
  • Accelerated depreciation and income taxes
  • Difference between depreciation and amortization
3. Impairment of Tangible Assets
  • Rio Tinto buys a coal mine in Mozambique
  • The strange tangible asset impairment test in US GAAP
  • Practice with tangible asset impairment computations
  • A big bath: Strategic reporting of impairment losses
4. Impairment of Intangible Assets
  • Why did Microsoft buy Nokia?
  • Intangible asset impairment test for finite-lived intangibles
  • Intuitive impairment test for infinite-lived intangibles
5. Impairment of Goodwill
  • The ill-fated AOL-Time Warner merger
  • The new goodwill impairment rule
  • The old and costly goodwill impairment rule
  • Case study in goodwill impairment: HP and Autonomy
6. Writing Assets Up?
  • Does Coca-Cola have more cash or more fixed assets?
  • The upward revaluation option under International Financial Reporting Standards (IFRS)
Conclusion
  • What will we report in the future, cost or fair value?

Taught by

Jim Stice and Kay Stice

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