Thursday, April 4, 2013

Goodwill Impairment

Executive SummaryGoodwill impairment describe in Canada and U.S. is similar except for the reporting of damaging goodwill and the processes that take place to play the goodwill.

The regard of amortisation of goodwill versus its write-off can be shown by comparing them to each other and by showing how utilitarian they atomic number 18 to investors. Goodwill amortization smoothes the earnings of the entities whereas write-off displace the income and increase the expenses. There are two-step processes that we use to calculate goodwill. We use only one step when there is no impairment but we use two-steps processes when impairment occurs in the counterbalance step.

There are many challenges in applying the impairment test. They are caused by companies taking advantage of this reporting, comparability between companies and its steep costs and time consuming.

Comparison of Canada, US, and International StandardIn July 2001accounting for goodwill in Canada and U.S. took a significant step with elimination of goodwill amortization and goodwill will be reviewed at least each year for impairment. The major difference between Canada, US, and IAS is accounting treatment for negative goodwill. Both Canada and US adopt same accounting standards regarding to this issue.

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accounting system for Negative GoodwillUnder SFAS141 the excess of acquire?s interest in the net fair value of acquiree?s identifiable assets, liabilities and contigngent liabilities everyplace cost is accounted for by reducing the carrying amounts of certain non-monetary assets and liabilities proportinatedly having completed this mould any remaining discount is taken to the profit and bolshie statement as an extraordinary gain, The carrying amounts of the following types of assets are non adjusted in this accounting entry.

?Financial assets ( other than investments accounted for using the equity method)?Assets acquired with the intention of near term disposal?Deferred taxes?Pre-paid indemnity assets, and?Other current assetsIn contrast IFRS 3 requires the fair values...

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