"Asset Impairments" Compare and contrast the differences between asset impairment under U.S. GAAP and IFRS. What...

"Asset Impairments"

Compare and contrast the differences between asset impairment under U.S. GAAP and IFRS. What are the financial statement implications of these differences?

Expert Solution

Answer:

Impairment of Value :

As Per US GAAP

Assets are tested for impairment when events or changes in indicators suggest that book value may not be recoverable.
An impairment loss is required when an asset's book value exceeds the undiscounted sum of the estimated future cash flow.
Under US GAAP there are three impairment model - One Model For Goodwill, One model for intengible with indefinite lives and one model applicable to other long lived assets.

As per IFRS

Assets must be assessed for circumstances of impairment at the end of each reporting period.
An impairment loss is required when an asset's book value exceeds the higher of the asset's value-in-use (present value of estimated future cash flow) and fair value less costs to sell.
Under IFRS a single model applies to - goodwill, intangibles with indefinite and finite values and property, plant and equipment.

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