Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Impairment Loss : Effective And Efficient

tag 0 Download5 Pages 1,139 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss about the Impairment Loss for Effective and Efficient.
 
 

Answer:

Introduction:

Under this study, we will understand about impairment loss used by the organizations. We will also learn to calculate this loss. It is one of the effective and efficient way by which a company can easily calculate its impairment loss of the assets. Though it helps to curb the taxes, but it will be very negative for the future of the company. There is a brief description about how this loss affects the company and it assets value. Impairment loss is occurred when there is a difference in the depreciate value of asset. When there is depreciation in fair market value of the assets and excess in the value of book value of the asset in the financial statements of the business. If there is an impairment loss in the business or the value of the asset is impaired, then it will show a negative sign for the business.

Meaning of impairment loss

Impairment loss means when there is a decrement in the net carrying value of an asset, and then the acquisition cost the asset minus depreciation, of the asset which is greater than the potential cash flow of the same asset. This situation arises when the company decides to sold the asset because it is expected that the asset no longer give any benefit to perform the operations to the same. This process does not take place through write down depreciation method but by an impairment loss that results in a tax benefit for the asset. Many times, the stockholders of public company lose their equity in their share. This situation depends upon type of asset that is being impaired. It results in lower debt to equity ratio for the company (Liu, 2013).

Calculations for Impairment Loss

The first step to calculate the impairment loss is to identify all the factors due to which the impairment of the assets takes place (Investopedia, 2014). Certain factors that results in impairment of the loss are-

Conditions in the marke

Conditions in the market- It refers to the market situation present there that directly or indirectly affects the working of the firm. It also represents the characteristic of the market which creates an impact on the assets of the firm. It can be customers, competitors growth of the other companies, etc (Stoia-Djeska and Frunzulica, 2015).

New rules and regulations by the government- Many times government imposed such laws that affect the value of the asset of an organization. Such rules and regulation passed by the government act as a barrier to the company’s asset.

Enforcement in regulatory- There are some specified polices passed by the government that is enforceable by the law. Such regulatory may or may not be beneficial for the company and its assets.

Turnover of the workforce- Employees turnover means the percentage and amount of the employees who left or leave the organization due to some personal reasons or benefits and that position is replaced by other employees. There is a need to measure the percentage of the employee turnover rate for an organization to controls it as it affects the budget of the company.

 

Decrease in the functions of assets- Many times, the value o the assets decrease because there is no issue of the asset or it becomes obsolete. It happens when there are many assts in the oraganisation or the asset is of no more use for the employees.

Aging of assets- When the asset becomes old and it s not giving any type of benefits to the organization then it will be sold by the company (Pavliková and Kralik, 2014).

Updated technology- It is one of the most crucial reason due to which the assets and their value become negligible. Whether the asset is old or not, due to new technology, it value is decreased. Up gradation in the technology is important too because no company can grow without innovation and up gradation (Changsheng and Yongfeng, 2012).

The fair market valuation is the key to calculate impairment loss. It cannot be recognized without a good or exact fair market value. It should not be the approx value also. Fair market value refers to the reasonable, correct and fair price of the asset if it will sod to the market it is also known as the future cash flow generated by the asset if the organization will continue the business operation with that asset. There is one more term to address this i.e., recoverable amount (Martin, 2010). Once, the calculation for the fair market value is calculated then it will be compare by the carrying value of that asset that written on the financial statement of the organization. There is no need to recalculate the carrying value of the asset as it already exists in the previous records of accounting. If the cost of the holding of the assets that is calculated by the company is more than the calculated fair market value of that asset, than it is considered as an impaired asset. If the asset in doubt is going to be set off, than the cost related with the set off asset must be added to the net of the potential net values less the carrying value of the asset.

There are two methods by which impairment a loss is being calculated. The methods are- the revaluation model of impairment or the cost model of impairment. The calculation of impairment and the models that will use to calculate the impairment depending on whether the amount of the debit will change or vary by the new ad adjusted fair market valuation that is described above. Sometimes the impairment results in the tax benefit for the company. But for the longer period of time it results as a negative aspect for the organization as whole. It generally shows the need for increased investments in the organization.

With this study, we can say that impairment loss is not good for the organization. Companies have to maintain the value of the assets. There must be a balance in the value of asset and the depriciation charged on the same. The companies should not us this for a shorter time benefits as it is harmful, for a longer run.

 

Referencing

Investopedia, (2014). How is impairment loss calculated?, [Online], Accessed on: 16 September 206, Available at: https://www.investopedia.com/ask/answers/101314/how-impairment-loss-calculated.asp

Changsheng, H. and Yongfeng, W. (2012). Investor Sentiment and Assets Valuation. Systems Engineering Procedia, 3, pp.166-171.

Liu, F. (2013). Are Exact Calculation and Computational Estimation Categorically Different?. Applied Cognitive Psychology, p.n/a-n/a.

Martin, I. (2010). The valuation of long-dated assets. Cambridge, Mass.: National Bureau of Economic Research.

Pavliková, Ľ. and Kralik, A. (2014). Valuation of Business Assets. AMM, 708, pp.228-232.

Stoia-Djeska, M. and Frunzulica, F. (2015). Sensitivities Calculation for Unsteady Flow Problems. Proc. Appl. Math. Mech., 15(1), pp.689-690.

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Impairment Loss : Effective And Efficient. Retrieved from https://myassignmenthelp.com/free-samples/impairment-loss-effective-and-efficient.

"Impairment Loss : Effective And Efficient." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/impairment-loss-effective-and-efficient.

My Assignment Help (2018) Impairment Loss : Effective And Efficient [Online]. Available from: https://myassignmenthelp.com/free-samples/impairment-loss-effective-and-efficient
[Accessed 05 December 2019].

My Assignment Help. 'Impairment Loss : Effective And Efficient' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/impairment-loss-effective-and-efficient> accessed 05 December 2019.

My Assignment Help. Impairment Loss : Effective And Efficient [Internet]. My Assignment Help. 2018 [cited 05 December 2019]. Available from: https://myassignmenthelp.com/free-samples/impairment-loss-effective-and-efficient.


MyAssignmenthelp.com boasts a pool of 3000+ PhD qualified dissertation writers, who are committed to providing highest quality dissertation paper help in more than 100 subjects. Each expert specializes in providing top-quality dissertation writing services in the exact manner that students want. Being a cheap dissertation writing services, we ensure prices don

Latest Samples

HRMT20028 Organisational Change Management 2

Download : 0 | Pages : 8

Answer: There is one phrase that talks about change; it states that change is the only constant thing present in the environment. This phrase clearly explains that the organizations need to develop and change in order to grow in the target market. According to Cameron, & Green, 2015, Change is an important aspect of the business cycle as it helps the organizations to carry on their activities in long run. The purpose of this essay is to en...

Read More arrow

ICT7610 Introduction To Information Systems 2

Download : 0 | Pages : 13
  • Course Code: NIT6130
  • University: Griffith University
  • Country: Australia

Answer: Introduction This report comes as a response to the request made by the CEO of Amazon Australia to analyze the existing human activity system, identifies the issues facing the system, propose a new system with recommendations based on the analysis. Amazon Australia is an online retail business based in Australia. It is responsible for selling a range of products to its customers, sells products on behalf of other retailers at a fee an...

Read More arrow

HRMT20028 Organisational Change Management 1

Download : 0 | Pages : 13

Answer: Introduction The literature review will focus on the importance of the internal and external factors which plays a driving role in bringing the organisational change, the detailed roles and responsibilities of the line managers and the senior management employees and their involvement in the implementation of the effective strategies in bring an organisational change. The literature review also highlights the reasons for resistance of...

Read More arrow

ISYS324 Faculty Of Law And Business Peter Faber

Download : 0 | Pages : 2

Answer: Introduction The stakeholders are the most important part of any organization it can be said that these are an accountant, organization, group member, or system that affects or can be affected by an organization's actions. Stakeholders are divided into two categories, namely the internal stakeholders and the external stakeholders (Jensen 2017). The process of proper analysing of the all the stakeholders that are present in the organis...

Read More arrow

SITHFAB005 Hospitality For Standard Measure And Equipment

Download : 0 | Pages : 11

Answer: Section A A complete checklist of duties for a new employee for preparing a bar for services. A new employee in a bar should be provided with the performance criteria that he or she should adhere to while rendering their services to customers who have come to the bar. These checklist does provide the needed performance that the employee should demonstrate that are essential for the utmost achievement of quality services. These ch...

Read More arrow
Next
watch

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,156,437

Orders

4.9/5

Overall Rating

5,050

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1592 Order Completed

96% Response Time

Jane Sima

Ph.D in Psychology with Specialization in Industrial-Organizational Psychology

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1692 Order Completed

98% Response Time

Alfred Dodd

PhD in Computer and Information Science with specialization in Database

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

184 Order Completed

96% Response Time

Arapera Billing

Masters in Management, MMgt

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

2594 Order Completed

95% Response Time

Michael Johnson

Masters of MSc in Economics

Washington, United States

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

I have here this site by one of my friends. It was a nice service for the students. Quicky response. Excellent

flag

User Id: 352144 - 05 Dec 2019

Australia

student rating student rating student rating student rating student rating

I received a perfect score!! The assignment was to identify the best action and the writer nailed all the parts perfectly.

flag

User Id: 348928 - 05 Dec 2019

Australia

student rating student rating student rating student rating student rating

I have made many assignment but i didnt get above 67 marks out of hundred as i pay high amount of money

flag

User Id: 337029 - 05 Dec 2019

Australia

student rating student rating student rating student rating student rating

This was fast and affordable. It would\'ve taken me much longer to start writing my essay. Instead, I\'ve got amazing help and also a great grade!

flag

User Id: 324077 - 05 Dec 2019

Australia

student rating student rating student rating student rating student rating
Have any Query?