Question

"If management review useful lives annually, impairment reviews will rarely by necessary." Give your views on...

"If management review useful lives annually, impairment reviews will rarely by necessary."

Give your views on this statement. What audit procedures should you carry out to see if an impairment review is necessary?

Homework Answers

Answer #1

I disagree with the statement, if management review useful lives annually, impairment reviews will rarely be necessary.

The useful life of an asset must be reviewed at least once in a year, may be at each balance sheet date.

The change as a result of difference in expectation, must be treated as a change in an accounting estimate.

Impairment reviews are done to check whether the asset is impaired or not. An asset is considerd to be impaired if its market price is less than the carrying value of the asset in company's books.

The purpose of both the reviews are different and therefore both the exercises are necessary in their own way.

Carrying value should be compared with the market values and if there is significant difference, one should go deep, assess and estimate the appropriate values to give effect to the impaired asset.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have been asked to review the useful lives of your company's fixed assets and recommend...
You have been asked to review the useful lives of your company's fixed assets and recommend any appropriate changes. Your company uses incentive compensation broadly across management levels and the incentives are tied to current profits. If you recommend shorter useful lives it will have an adverse impact on profits in the short term. How should you approach this assignment?
Directions: Below is a prompt from the Ch. 8 “Critical Thinking” tab in your book. This...
Directions: Below is a prompt from the Ch. 8 “Critical Thinking” tab in your book. This is #11. (I have copied and pasted for your convenience.) Your task is to answer the question in the prompt and the additional questions that I have added. Respond to 2 other students replies. You must address the student by name and give a thoughtful and thorough response. Understand you will be writing of your own experience and keep in mind that other students...
1. If your accounting firm is hired to examine a public company’s gift card program for...
1. If your accounting firm is hired to examine a public company’s gift card program for compliance with regulations. Which type of service is your firm providing? Select one: a. Assurance b. Attestation c. Auditing d. Review 2. Near the end of an audit, the application of analytical procedures is Select one: a. recommended by auditing standards. b. not mentioned by auditing standards. c. not useful, since detailed substantive procedures have already been performed. d. required by auditing standards. 3....
Consider each of the following material independent situations. In each case assume that the client is...
Consider each of the following material independent situations. In each case assume that the client is a reporting entity and that general purpose financial statements have been prepared for the year ended the 30th June 20X9. You (as the auditor) have conducted your audit testing and are ready to prepare the audit report. Also assume that in each case management will not take any further action should you request such. a) Green Ltd (Green) is a furniture wholesaler. The recent...
What is your opinion on this statement based on the idea of what audit steps would...
What is your opinion on this statement based on the idea of what audit steps would you perform to evaluate the contract bidding process? While auditing an organizations contract bidding process, I would make a preliminary survey, plan the audit approach, and establish audit objectives. In my preliminary survey, I would interview key personnel who are involved in the procurement process, such as the chief procurement officer or similar staff, review the purchasing policy of the organization, and determine what...
To be effective, “managers implement six management functions as they carry out the process of management”;...
To be effective, “managers implement six management functions as they carry out the process of management”; the first of these processes is the Planning function. “This function requires the manager to set a direction and determine what needs to be accomplished. It means setting priorities and determining performance targets” (Longest et al., 2000). As you can see, planning is also something that relates to the household setting. It is often said that a household is actually a small business. Consider...
MANAGEMENT IN NURSING -Power in Nursing Leadership and Management Learning Exercise: Give your opinion and a...
MANAGEMENT IN NURSING -Power in Nursing Leadership and Management Learning Exercise: Give your opinion and a supporting statement from a reliable source for the following questions: 1. Research studies suggest differences in how men and women view power and how others view men and women in positions of authority. Do you think that there are gender differences on how people viewed as being powerful? 2. Who did you feel was most powerful in your family while growing up and what...
Hi. I want to get feedback on this question. What should i add or remove or...
Hi. I want to get feedback on this question. What should i add or remove or any correction. Boulded written is question and regulat writing is answer. Please guide. Thank you. BACKGROUND Apply audit risk and materiality concepts to address the following circumstances regarding Able & Baker LLP’s audits of the financial statements of Foster Engineering, Inc. 1. Able & Baker LLP auditors are beginning their audit of Foster’s 2017 financial statements. Because of changes in the market and increased...
Problem 1 You are an internal audit manager in a central government department that pays subsidies...
Problem 1 You are an internal audit manager in a central government department that pays subsidies to agricultural businesses involved in the production of basic foodstuffs. You will soon be undertaking an internal audit of the claims processing unit in your department. In preparation for the assignment you are reviewing the audit file on the previous audit carried out three years earlier. You find the following extract from one of the previous internal audit’s planning schedules: • “The unit receives...
For your last assignment, which will be due next Thursday, before the last day of class,...
For your last assignment, which will be due next Thursday, before the last day of class, please refer back to the massage parlor business statement, attached herein. Given the way I have described what to do below I do not think this should take you more than an hour or two. Further, it should allow you to see the big picture of the audit. Here is what I want you to do. STEP 1: For the following balance sheet items,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT