Asset Impairment for Australian Companies
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The paper explores the degree to which fifty Australian listed public companies complied to goodwill accounting within the first years of their compliance to this form of accounting as stipulated in AASB 136. The paper discusses the pressure for these companies to shift from the traditional accounting architecture in goodwill impairment and comply with the International Financial Reporting Standards (IFRS) policy of fair value accounting. The paper reviews the literature on goodwill impairment decisions, and specifically, the American study of impairment by Ross L. Watts.
From the Paper:"The past has witnessed significant changes and turmoil in the practice and domain of goodwill accounting. Carlin and Finch, (2008) postulate that goodwill accounting has faced numerous challenges over time; among which includes the use of forceful expense deferral amortization methods; immediate post-acquisition write-offs, development allocations and extreme in-process study. In considering the present preferences as postulated by standard setters for goodwill impairment testing, it is valuable to adopt goodwill reporting procedure pursuant to IFRS.
"Carlin and Finch, (2008) in Ernst & Young, (2001) postulate that a variety Australian publications during the approval of the issuance of SFAS 141 & 142 enquired the possible effects of the failure of the Australian regulations to shift to the new accounting architecture in damaging the capabilities of Australian quartered businesses in efficiently competing on international prices. In spite of various lobbying efforts in Australia, it appeared a must given the prominence accorded to global harmonization, that the USA shift to an impairment establishment would joggle some countries like Australia to contemplate alternative actions. Carlin and Finch, (2008) highlight four major reasons behind Australia's adoption of the new regime (in accounting)."
Sample of Sources Used:
- Lhaopadchan, S., 2010, Fair Value Accounting and Intangible Assets: Goodwill Impairment and Managerial Choice. Journal of Financial Regulation and Compliance, 18 (2), pp. 120-130.
- Carlin, T.M., & Finch, N., 2008, Resisting compliance with IFRS goodwill accounting and reporting disclosures: Evidence from Australia. Journal of Accounting & Organizational Change, 6 (2), pp. 260-280.
- Kvaal, E., 2005, Topics in accounting for impairment of fixed assets. Series of Dissertations, [Online]. Available at: http://web.bi.no/forskning/papers.nsf/349b2672a809db42c1256e620044a25f/6f69655decead80cc125705e0049b44b/$FILE/05-03-kvaal.pdf [Accessed 06 Sept 2010].
- Ramanna, K. & Watts, R.L., 2008, Evidence from Goodwill Non-impairments on the Effects of Unverifiable Fair-Value Accounting. Available at: http://www.hbs.edu/research/pdf/08-014.pdf [Accessed 04 Sept. 2010].
- Brand Finance, December 2008, Australian intangible asset review: An evaluation of intangible asset disclosure in Australia [Online]. Available at: http://www.brandfinance.com/Uploads/pdfs/Australian%20Intangible%20Asset%20Review%20Dec08.pdf [Accessed: 29 Sept. 2010].
Cite this Analytical Essay:
Asset Impairment for Australian Companies (2013, May 12) Retrieved February 26, 2020, from https://www.academon.com/analytical-essay/asset-impairment-for-australian-companies-153263/
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