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Impairment of Assets

In: Business and Management

Submitted By guochao
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FASB 144 Impairment of Assets

Assets held for use

Includes land, building, equipment, natural resources, and intangible assets

FASB 147 specifies that intangibles from the banking industry are covered by FASB 144 rules:

Long-term customer relationship assets such as Depositor-relationships intangible assets Borrower-relationships intangible assets Credit card holder Intangible assets

When should impairment be recognized?

Testing each asset each period would be too costly

Events or changes in circumstances indicate that its carrying amount may not be recoverable


Decline in market value

Change in way asset is used or physical change in asset

Adverse changes in legal factors or business climate

Accumulated costs in excess of amounts originally expected to construct or acquire asset

Current expectation that, more likely than not, a long-lived asset will be sold or disposed of significantly before the end of its previously estimated useful life

Current period losses with history of operating or cash flow losses associated with asset

To apply impairment tests

A long-lived asset shall be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Primary asset approach

FASB 144 establishes a "primary-asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used

Goodwill is included in...

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