Eagle Impairment Case Essay

1137 words - 5 pages

Eagle Impairment Case
The following report outlines an analysis of Eagle Company’s assets in Serbia and Italy. With the information provided, we have created a detailed report to assess which assets should be impaired along with its impairment value under the IFRS and US GAAP standards.

Eagle in Italy

Under IFRS:
Eagle owns a commercial building in Italy. The carrying amount is $1,100 with $900 being the value in use. According to IAS 36 P18, “An asset is impaired when its carrying amount exceeds its recoverable amount.” In this case, the carrying amount ($1,100) exceeds the recoverable amount (Higher of Value in use) of $900. Eagle should report an impairment loss of the difference ...view middle of the document...

” The difference between the book value of the assets and its recoverable amount (given in the discounted cash flows under “Total present value as of 12/31/13”) is the impairment loss recorded: 1.05M-1.3M=-250K. Under IFRS, Eagle should record an impairment loss of $250,000 for their CGU in Serbia.
Under US GAAP
ASC 360-20-35-2 states, “Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.” Under US GAAP, Eagle’s CGU’s in Serbia should be tested under the goodwill impairment test after measuring it’s impairment.

• ASC 360-20-35-8: “If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any.”

The carrying value (determined above) of $1.3M exceeds the fair value of $1.05M indicating a need to calculate the determination of implied goodwill.

• ASC 360-20-35-9: “The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.”

Fair value of the CGU: $1.05M
Fair value less goodwill: $1M
Implied value: $1.05M-$1M= $50,000

Impairment loss:
Book value goodwill: $300,000
Implied value: $50,000
Impairment loss: $300,000-$50,000= $250,000

(3.2) Management’s assumption that “no costs to sell would be incurred” is acceptable; however their assumption of growth is not. IAS 36 P33 (c) states that to measure a value of an entity, “Estimate cash flow projections beyond the period…based on the budgets/forecasts using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified”. The change in legislation at the end of 2013 significantly restricted the exports of Eagle’s main product. Because of this Eagle’s external environment becomes very volatile as industry reports “estimate no growth rate for the foreseeable future”. Certainly assuming a 1% increase from year to year is not acceptable in this context.
(3.2) IAS 36 P33 (b) also states that management should “exclude any estimated future cash inflows or outflows expected to arise from future restructurings or from improving or enhancing the asset’s performance.” Eagle’s cash flow subtracted inflows from capital expenditures. It is...

Hospitals Paper

6014 words - 25 pages I hope to provide in this paper a comprehensive understanding for what the term “hospital” has become. Hospitals are an extremely complex system that man has created and shaped and reshaped throughout history. My goal in writing and researching this paper will be to provide those who read it a clear understanding on how the hospital system got to where it is today, and to shed some light on the many organizations that affiliate with and

Course Syllabus Essay

2610 words - 11 pages C or better in their developmental course. | |Late Work and Make-up |It is important to finish assignments in time. In case of late works, make-up assignments will be given but with a 5% score | |Assignments |reduction. | |Topical Outline / Course

Management

1477 words - 6 pages themselves to the Boeing Values. The Code of Conduct is a certification that occurs on a yearly basis to certify all employees that they will follow the Code of Conduct (The Boeing Company: Ethics, 1999-2012). The Ethics Challenge is where Boeing provides training to help educate employees about certain situations that may arise throughout the day. In this challenge, there are specific case scenarios that can be used (The Boeing Company: Ethics

Assisted Suicide

1015 words - 5 pages Should physician-assisted suicide be legal? While I believe if one chooses to end his or own life through physician assistance for reasons that they chose, the choice should be up to the individual. Physician-assisted suicide should be at one's discretion. “Assisted Suicide, also called Voluntary Euthanasia, is currently a contentious issue in many countries. Because Euthanasia is legal in a few modern democracies: the Netherlands, Belgium

Tanglewood Case 1

797 words - 4 pages of their focal points of having a successful business is having exceeding customer service, and there is no need to go out and acquire new talent when Tanglewood already has the staff capable of developing their KSAOs. However, Tanglewood will need to acquire new talent if the company decides to open up a new store. Should Tanglewood look for new employees or outsource for staffing? In Tanglewood’s case, I would recommend using an outside

Nnnnn

1391 words - 6 pages Есе по въпроса: Кои от всички „действащи” лица могат да се разглеждат като морално отговорни и в какво именно? по казуса Форд „Пинто” Корпоративните злодеяния са нанесли повече вреди на обществото от всички улични престъпления взети заедно. Според данни на ФБР сумата от уличните престъпления възлиза на $3.8 млрд. годишно, а загубите от корпоративните измами между $100 млрд. и $400 млрд. годишно

The Penis

1052 words - 5 pages The short story ”The Penis” is written by Hanif Kureishi. The short story is about a penis, which has been separated from its owner Doug, who we hear from later on. At first though we hear about a guy called Alfie who was “a cutter – a hairdresser – and had to get to work”. He is having breakfast with his wife, when she asks him what he did last night, and if he had a good time last night? Alfie can not remember what he did last night, he then

Managed Care Paper

543 words - 3 pages Managed Care and Case Management Care Marvin Lloyd BSHS/402-Case Management 27 August 2012 Virgil Miller Managed Care are techniques employed to help reduce the cost for providing health benefits and a system for improving organizations quality of

Media

439 words - 2 pages The life expectancy is lower; so people are not kept alive with drugs for decades in a virtual sleep state. There is less state education; so kids don't have it drilled into them that their only goal in life is to make money, at the cost of 'everything' else. The health care is less; so diseases, usually brought by Westerners, kill many more than they do in countries where drug companies can make a fortune from selling medicines that aren't

Chapter 6 International Business

7113 words - 29 pages CGGGG The Political Economy of International Trade Chapter Outline OPENING CASE: Why Are Global Food Prices Soaring? INTRODUCTION INSTRUMENTS OF TRADE POLICY Tariffs Subsides Country Focus: Subsidized Wheat Production in Japan Import Quotas and Voluntary Export Restraints Local Content Requirements Administrative Polices Antidumping Policies Management Focus: U.S. Magnesium

Scope And Goals

279 words - 2 pages Introduction: Kudler Fine Foods is a specialty food store based in San Diego, California with its three locations in La Jolla, Del Mar, and Encinitas. Kudler Fine food prides itself on offering fresh and organic products that are carefully selected from local farmers and around the world. The organization has recently taken the initiative to start a Frequent Shopper Program to market and increase sales. This program will offer the customers a

Eagle Impairment Loss Case Essay

1208 words - 5 pages Case #2 (Eagle Impairment Loss) Question 1: The Impairment Loss of Eagle in Italy under IFRS Recoverability test: Asset’s carrying amount exceeds the recoverable amount which is the higher of the asset’s value-in-use (discounted present value of the asset’s expected future cash flows) and fair market value less costs to sell. (IAS36-15) According to IAS36-6, “an impairment loss is the amount by which the carrying amount of an asset or a

Mgt216 Essay

714 words - 3 pages The first ethical issue presented in the ethics game simulation was whether to warn consumers about the contaminated product and what information to provide consumers about the contaminant. The second ethical issue was whether to sell a product that does not meet U.S. safety requirements in a foreign market that has lower safety restrictions. G-BioSport was not required to meet prior approval from the Federal Drug Administration before they

Economy Effect Of Marijuana Essay

277 words - 2 pages Modern American History by Alan Renga 2nd Mid Term! You will be given 3 Short Essay questions and 20 Multiple Choice questions deriving from this list! 80 points total! The 1920s Warren Harding then Calvin Coolidge Tea Pot Dome 1st Red Scare Immigration Restriction, Sacco and Vanzetti Langston Hughes, Marcus Garvey, KKK Prosperity, advertising Prohibition, Al Capone Flappers, Clara Bow, Rudolph Valentino Babe Ruth, Jack Dempsey

The Vc Shakeout Essay

2033 words - 9 pages ECONOMY 26 Luring a big ﬁrm to town is not the secret to job growth DEFEND YOUR RESEARCH 30 Are morning people wired for success? VISION STATEMENT 32 The social web’s east-west divide COLUMN 38 Warren Bennis looks back on his surprising path to fame New Thinking, Research in Progress hbr.org New Thinking, Research in Progress hbr.org FIRST The VC Shakeout Venture capital hasn’t worked for a decade and must be radically