ACCG2024: Financial Accounting and Reporting - Impairment Testing and Asset Values - Accounting Assignment Help

Assignment Task :

Part I – Research based report 

As a student intern and future accountant, you have recently joined the accounting department of an ASX listed company. In their last meeting, the Board of Directors of your company has discussed ASIC's press release 19-143MR Major Financial Reporting Changes and other focuses for 30 June 2019 financial reports

2. Impairment testing and asset values 

The recoverability of the carrying amounts of assets such as goodwill, other intangibles and property, plant and equipment continues to be an important area of focus. 

It is important for directors and auditors to ensure: 

a. cash flows and assumptions are reasonable having regard to matters such as historical cash flows, economic and market conditions, and funding costs. Particularly where prior period cash flow projections have not been met, careful consideration should be given to whether current assumptions are reasonable and supportable;

b. discounted cash flows are not used to determine fair value less costs of disposal where forecasts and assumptions are not reasonable and supportable;

c. cash flows used are matched to carrying values of all assets that generate those cash flows, including inventories, receivables and tax balances;

d. discount rates and other key assumptions are reasonable and supportable;

e. cash generating units (CGUs) are not identified at too high a level, including where cash inflows for individual assets are not largely independent; and

f. for testing goodwill, CGUs are not grouped at a higher level than the operating segments or the level at which results are monitored for internal management purposes.

Based on the Board's request, the CFO asks you to draft a business research report addressed to the Board of Directors on the following: 

a. Summarise the disclosure requirements for impairment of non-financial assets as per AASB 136 

b. Critically analyse to what extent the latest annual report of your company meets the disclosure requirements for impairment of the non-financial assets as per AASB 136 

c. A critical analysis of some of the complexities and key issues involved in impairment testing. In your analysis, you can refer to one or more publications issued by the ‘Big 4’ firms, 

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