Case 4.1: Asset Impairments in the Recession of 2008-2009
Answer the questions:
1) Evaluate the five general valuation rules discussed at the beginning of the case. Is it useful to have those different valuation methods? Explain
2) Why are the impairment rules for goodwill different than other assets? Explain.
3) Evaluate the recoverability test used in U.S. GAAP.
4) Are the differences between IFRS and U.S. GAAP significant? Explain.
5) Compare the three IFRS disclosures in Exhibits 1, 2, and 3. How subjective are the impairment calculation? which assumptions needed to compute impairment are the most subjective
6) Compare the two U.S. GAAP disclosures, using the same criteria as in question 5.
7) which of the five disclosures is most informative? Which is lease informative? why?
8) Which disclosures are most informative, the IFRS disclosures, the U.S. GAAP disclosures, or are the differences more company specific? Explain.
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