ACTG 3110 Lecture Notes - Lecture 10: Book Value, Write-Off

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If there is an indication of impairment then you do impairment test. Required to review indicators on impairment every year. Standby equipment depreciate even when it"s ready to use. Spare parts don"t depreciate, depreciate when installed and used. Step 1 calculate rate (%) 0 double straight-line. Step 2 start with total cost (don"t deduct residual cost) Group the assets together if they have similar depreciation pattern. Group amortization for homogeneous items use averages small items e. g. tools. Identification asset or cash generating unit cgu: review impairment indicators every year (ifrs) If indication of impairment measure recoverable amount (write down to the recoverable amount) if impairment write down to recoverable amount and allocate impairment loss internal and external indicators eg: significant change in business environment physical damage loss of patent. Compared carrying amount to the higher of fv less cost to sell. Write down goodwill first, goodwill can"t be reversed.

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