The new value in use as stated by ED 3 - business combinations, and amendments to IAS 36 impairment of assets, and IAS 38 Intangible assets
8/2004 , p60..75
Author(s):
Raluca GUŞE
Mirela PĂUNESCU
Keywords:
value in use, impairment loss, goodwill, cash-flow projections, discount rate
Abstract:
IASB started a project in order to review IASB Standards regarding business combinations and recognition of goodwill, especially IAS 22 - Business Combinations: ED 3 - Business Combinations, and Amendments to IAS 36, Impairment of Assets, and IAS 38 Intangible Assets. Its main goal consists of updating IAS 36 and IAS 38 dispositions about goodwill. The IASB’s intention in developing these proposals was not to reconsider all of the requirements in IAS 36 and IAS 38.
This paper focuses on the main changes ED3 proposed for IAS 36 Impairment of assets and IAS 38 Intangible assets, enumerating the most important arguments for and against those changes and provides a detailed analysis of important areas related to the impairment of goodwill, such as: measurement of the value in use, frequency of impairment tests for goodwill, goodwill allocation between the assets of a cash-generating unit, reversals of an impairment loss for goodwill and also disclosures for the impairment of cash-generating units as well as for intangible assets. We also tried to explain using practical study cases how those changes will affect financial statements and how they should be transpose in everyday transaction.
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