The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Question

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Answer 1

Question

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

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Financing Deficit Stevens Textile Corporation's 2019 financial statements are shown below: Just need the correct LOC? Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for December 31, 2019 (Thousands of Dollars) Sales $36,000 Operating costs 34,000 Earnings before interest and taxes $ 2,000 Interest 160 Pre-tax earnings $ 1,840 Taxes (25%) 460 Net income $ 1,380 Dividends (40%) $ 552 Addition to retained earnings $ 828 Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to…

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Answer 2

Question

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

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Answer 3

Question

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

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Answer 4

Question

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

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Answer 5

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

Answer 6

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

Answer 7

Chapter 12, Problem 12.1Q

To determine

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Answer 8

Expert Solution & Answer

Answer to Problem 12.1Q

Yes the impairment tests for tangible-long term operating assets operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Tangible Assets:

Tangible assets are those assets that are physically present in an organization and will generate cash flows for a number of years.

Intangible Assets:

Intangible assets are those assets that are not physically present in an organization but have economic values and are capable to generate cash flows for a number of years.

The difference in the both tests can be explained in the points below:

The impairment tests for tangible-long term operating assets and intangible assets are identical, the only difference is, that in case of intangible assets test for impairment is to be conducted even if there is absence of impairment indicators.
Impairment is calculated by measuring the asset’s recoverable value, if such value is less than its carrying amount than an impairment loss is booked.
Recoverable value is greater of (a) Fair value less cost to sell and; (b) Present value of expected cash flows expected from the asset.

Answer 12

Conclusion

Hence, the difference is that intangible assets are considered for impairment even if there is absence of impairment indicators while tangible assets are not.

Answer 13

Ch. 12 - Prob. 12.1Q Ch. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3Q Ch. 12 - Prob. 12.4Q Ch. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6Q Ch. 12 - Prob. 12.7Q Ch. 12 - Prob. 12.8Q Ch. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

The difference if any in the impairment test for tangible long-term operating assets from intangible assets.

Answer to Problem 12.1Q

Explanation of Solution

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