Chapter vii. Asset impairment

One 、 Overview of asset impairment

1、 Scope of impairment of assets

（1）、 The first 8 Number 《 Asset impairment 》 The guidelines apply to ： Non current assets

       Include ： Long term equity investment 、 Investment real estate （ Cost model ）、 Fixed assets 、 Intangible assets 、 goodwill 、 Productive biological assets 、 Prove the rights and interests of oil and gas mining areas and well related facilities

 

2、 Signs and tests of asset impairment

Asset class	Impairment test
General assets	There are signs of impairment -->  Impairment test only at the end of the period
goodwill Intangible assets with uncertain service life Intangible assets that have not yet reached the expected usable state notes ： None of the above is amortized , No physical form , High risk ,	Whether or not there are signs of impairment -->  Impairment test at least at the end of each year

 

Impairment test ： Book value VS Recoverable amount

                  Book value > Recoverable amount ： Impairment occurred

                  Book value < Recoverable amount ： No impairment occurred

 

answer ：BCD.

 

Two 、 Measurement of recoverable amount of assets

1、 The basic method of estimating the recoverable amount of assets

Recoverable amount ：Max（ fair value – Disposal expenses VS Of future cash flows Present value ）

 

（1）、 The net amount of fair value minus disposal expenses and the present value of estimated future cash flow , As long as one item exceeds Book value , It indicates that the asset is not impaired , There is no need to estimate another amount .

（2）、 There is no conclusive evidence or reason to show that , The present value of the estimated future cash flow of the asset is significantly greater than the net amount of its fair value minus disposal expenses ; The net amount of the fair value of the asset minus the disposal expenses can be regarded as the net amount of the asset Recoverable amount .

（3）、 The net amount of the fair value of the asset minus the disposal expenses if It is impossible to estimate reliably , The recoverable amount shall be the present value of the expected future cash flow of the asset .

 

2、 Estimated net amount of fair value less disposal expenses

（1）、 fair value ： Selling price , The price at which an asset can be sold or a liability can be transferred

Determine in the following order ：

1. Sales agreement price in fair trade （ The contract price ）
2. There is no sales agreement, there is an active market （ The market price ）
3. No agreement, no active market ： It is estimated that （ Recent transaction prices of similar assets in the same industry ）

（2）、 Disposal expenses ： Incremental costs that can be directly attributed to asset disposal , Excluding financial expenses 、 Income tax expense .

 

3、 Present value estimation of estimated future cash flow

1、 Factors affecting the present value of estimated future cash flow ：

       a． The expected future cash flow of the asset

       b． Service life of assets

       c． Discount rate

 

2、 Estimation of future cash flow of assets ： To assets Based on the current situation （ affirmatory , Regardless of possible and uncertain ）

       The following situations are not considered ：

1. What may happen in the future 、 Restructuring matters for which no commitment has been made .（ Determining the of reorganization will consider ）
2. Estimated future cash flow related to asset improvement .（ The future cash flow recognized after improvement will take into account ）
3. Cash flows from financing activities and income tax payments .

 

3、 The method of estimating the future cash flow of assets

       a． Traditional law （ Single ）

       b． Expected cash flow method （ Weighted average ）

Expected cash flow method ： For example, the estimated cash flow at the end of the year 50 Ten thousand probability 70%,30 Ten thousand probability 30%. Then the future cash flow is 50×70% + 30×30% =44 ten thousand .

 

4、 The estimated discount rate

       a． Pre tax interest rate that reflects the current time value of money and the specific risks of assets

       b． Market interest rate is preferred , Interest rate substitution comes second

       c． The estimation of discount rate is consistent with the estimation basis of future cash flow of assets . For example, risk 、 Inflation .

 

5、 Foreign currency Prediction of future cash flow and its present value ： Discount first , Post conversion （ exchange rate ）

       Discount first , Post conversion ： It ensures that the exchange rate is the current real exchange rate , Instead of forward estimated exchange rates .

answer ：D

answer ：C

answer ：ABCD

 

 

3、 ... and 、 Recognition and measurement of asset impairment loss

1、 Confirmation principle

        Recoverable amount < Book value , Impairment occurred , Provision for impairment , Impairment amount （ What happened ） Is the difference between the two .

      （1）、 After the asset impairment loss is recognized , Depreciation and amortization expenses of impaired assets shall be adjusted accordingly in future periods .

      （2）、 Once an asset is impaired , In the future Do not turn back （ Non current assets , The unit price is high , Prevent operating profit ）

 

 

2、 Account setting and accounting treatment

       borrow ： assets impairment loss

              loan ：XX Provision for impairment

（ Affect profits ： A decrease in profits , Decrease in assets ）

 

attach ：

       stock ：     cost VS Net realizable value , balance （ Inventory falling price reserves ）

       Asset impairment ： Book value VS Recoverable amount , What happened （XX Provision for impairment ）

 

 

Four 、 Recognition and impairment treatment of asset group

1、 Identification of asset group

       （1）、 Generation of asset groups ： When the recoverable amount of an asset cannot be estimated individually

       （2）、 Identification of asset group ：

                     a． Be able to create Independent Cash flow of

                     b． Minimum Portfolio （ The most cautious when estimating individual assets , Multiple estimates may offset each other between impaired assets and non impaired assets ）

 

2、 Asset group impairment test

       （1）、 Impairment test

The book value of the asset group VS Recoverable amount of asset group

              Be careful ： Determine whether the basis is consistent

 

（2）、 Accounting treatment of asset impairment

        

Offset goodwill first , Deduct other assets in proportion to goodwill . There may also be a need for secondary apportionment .

 

3、 Impairment test of headquarters assets

（1）、 Headquarters assets

Office buildings of enterprise groups or other business units 、 Electronic data processing equipment 、 R & D center and other assets .

              a． features ： It is difficult to separate from other assets or asset groups to generate independent cash inflows .

              b． It is necessary to conduct impairment test in combination with other asset groups or asset portfolios .

       Portfolio ： The smallest asset group combination composed of several asset groups , Including asset group or combination of asset groups , And press reasonable The part of headquarters assets allocated by the method .

 

（2）、 The treatment idea of asset impairment of the headquarters

 

Apportionable portion a： A reasonable and consistent approach will a Apportion to a1、a2、a3（a=a1+a2+a3）, And asset groups respectively A、B、C Package and combine into a new asset portfolio （ Asset group A+a1、 Asset group B+a2、 Asset group C+a3） Conduct impairment test .

 

Illustrate with examples ：