Students are expected to attend classes with the weekly worksheets and subject support material provided in Moodle. Students should read this material before coming to class to improve their ability to participate in the weekly activities.
Students will require access to the internet and their KOI email and should have basic skills in word processing software such as MS Word, spreadsheet software such as MS Excel and visual presentation software such as MS PowerPoint.
Computers are available for student use in the Library. However these are in demand at peak times and tutorial classes may have priority use. You should therefore plan well in advance to utilise these resources. If you have your own computer, it should have internet access and relevant software installed. Students are encouraged to make use of the campus Library for reference materials
Where students are not satisfied with the results of an assessment, including mid-trimester exams, they have the right to appeal. The process is as follows:
Discuss the assessment with their tutor or lecturer – students should identify where they feel more marks should have been awarded – students should provide valid reasons based on the marking guide provided for the assessment. Reasons such as “I worked really hard” are not considered valid.
If still not satisfied, students should complete an Application for Review of Assessment Marks form, detailing the reason for review. This form can be found on the KOI website and is also available at KOI Reception (Market St and Kent St).
Application for Review of Assessment Marks forms must be submitted as explained on the form within ten (10) working days of the return of the marked assessment, or within five (5) working days after the return of the assessment if the assessment is returned after the end of the trimester.
Expectations from Students
According to one basic principle of impairment, one cannot introduce a specific asset above its recoverable value in balance sheet and it is considered as the higher of the fair value of the asset less value-in-use and selling cost. In case the former exceeds the latter, the companies are needed to consider the impairment and it is needed to make the comparison between recoverable value and carrying value. At the time of the recognition of impairment loss in the income statement, companies are needed to allocate the asset to impairment (Amiraslani, Iatridis and Pope 2013).
The companies are needed to test the assets for impairment that are subject to impairment review in the presence of impairment indication. In the absence of impairment indication, companies are needed to impair the assets like goodwill and other intangible assets on annual basis. Thus, it is needed to do the calculation of the recoverable value of the individual assets. It needs to be mentioned that the assets have independent cash flows from the other assets and thus, they are considered for impairment testing and classified as cash-generating units (Guthrie and Pang 2013).
According to AASB 136: Impairment of Assets, Paragraph 104, in case the carrying value of the assets is higher than cash-generating units, it is possible to recover the loss of impairment (aasb.gov.au 2018). The aim of impairment loss distribution is the reduction in the asset carrying value in a chronological order. The first process involves in the reduction in the value of goodwill that is assigned to cash-generating units. In the second process, there will be minimization of the other units of assets on the pro-rate basis that depends on the asset carrying value.
It is needed for the companies to treat these reduction in the carrying amount as impairment losses on different assets and they are needed to be recognized under AASB 136: Impairment of Assets, Paragraph 60. In addition, as per AASB 136: Impairment of Assets, Paragraph 105, the companies should not reduce the asset carrying amount below the available three highest alternatives for the distribution of the loss of impairment (aasb.gov.au 2018). The alternatives are zero, fair value less cost of disposal and value-in-use.
Companies have the option to distribute the loss of impairment to the assets distributed towards the pro-rata basis to the different units of the asset. According to AASB 136: Impairment of Assets, Paragraph 106, companies cannot do the estimation of the recoverable amount every time for the individual asset of the cash-generating unit (aasb.gov.au 2018). Thus, there is a requirement of random distribution of the loss of impairment between the assets and goodwill is the only exception. The main reason is that the cash-generating unit assets operate in combination and goodwill is the exception.
Computer and Internet Access
According to AASB 136: Impairment of Assets, Paragraph 107, two distinct situations may be occurred when it is not possible for the ascertainment of the separate assets’ recoverable value. In case, the fair value less cost of disposal is lower than the carrying value of the asset, there is realization of the impairment loss; and this fact can be seen in the standard of AASB 136: Impairment of Assets, Paragraph 104. After that, in case there is not any impairment related to the assets of cash generating units, there can be the recognition of loss on impairments. This situation is possible when the fair value of the asset is higher than the carrying value of the assets after the deduction of the cost of disposal (aasb.gov.au 2018).
An example can be taken into consideration where there is a physical damage in a machine. Despite of the reduction of the effectiveness of the machine at the present date, this can be use for the purpose of production. The company has identified the fact that the fair value of the machine less cost of disposal is higher the carrying value of that particular machine. In addition, the machine has failed in generating any independent cash flow (Linnenluecke et al. 2015). The machine can be considered as the lowest identifiable asset classes along with the derivation of the independent cash flows in the production line. The production line’s recoverable value signifies that this production is not fully impaired.
This situation can lead to two distinct assumptions. As per the initial assumption, the budget or the estimation of the management indicates towards the level of commitment for the substitution of the machine. The company cannot estimate the machine’s recoverable amount in the presence of the non-identical value-in-use of the machine with the fair values less disposal cost (Bloom 2013). The determination of this is done for the cash generating units of the machine. Thus, there will not be any recognition of the loss of impairment and thus, it becomes mandatory for the companies to reassess the period of deprecation or the deprecation technique related to the machine. Hence, the suggestion for the companies is the adoption of shorter period of deprecation or the implementation of paid method of deprecation. This will assist in the assessment of the remaining life of the machine (Huian 2013).
As per the second assumption, the management’s budget or estimation indicates towards the commitment related to the substitution of the machine by selling it in the future. It is estimated that there will not be many cash flows from the continuous use of the machine until its disposal and thus, the determination of the recoverable value of the machine is difficult. Thus, there is not any consideration made to the cash generating units where the machine belongs to the line of production. Hence, there will be loss of impairment for the machine as the carrying value of the machine is greater than fair value less cost of disposal (Bond, Govendir and Wells 2016).
The above discussion indicates towards the fact that loss is distributed among the cash generating units on pro-rata basis when there is impairment loss. However, this process does not consider the value of goodwill as the loss has relevance with the total carrying value of the cash-generating units in the companies. Lastly, the companies are needed to treat the accounting losses in the same manner as the distinct asset (Biondi and Lapsley 2014).
References
Aasb.gov.au. (2018). Impairment of Assets. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB136_07-04_COMPjun09_01-10.pdf [Accessed 23 Sep. 2018].
Amiraslani, H., Iatridis, G.E. and Pope, P.F., 2013. Accounting for asset impairment: a test for IFRS compliance across Europe. Centre for Financial Analysis and Reporting Research (CeFARR).
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage assets problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Bloom, M., 2013. Double accounting for goodwill: A problem redefined. Routledge.
Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136. Accounting & Finance, 56(1), pp.259-288.
Guthrie, J. and Pang, T.T., 2013. Disclosure of Goodwill Impairment under AASB 136 from 2005–2010. Australian Accounting Review, 23(3), pp.216-231.
Huian, M., 2013. Stakeholder’s participation in the development of the new accounting rules regarding the impairment of financial assets. Business Management Dynamics, 2(9), pp.23-35.
Linnenluecke, M.K., Birt, J., Lyon, J. and Sidhu, B.K., 2015. Planetary boundaries: implications for asset impairment. Accounting & Finance, 55(4), pp.911-929.
