Corporate Accounting Aasb3 136 Impairment of Assets Essays

3944 Words Sep 5th, 2012 16 Pages
Part A (6 Marks)
AASB 3 Business combinations para.14 requires that the acquisition method be used to account for business combinations. This method requires the identification of the acquirer. For example, para.17 states that “an acquirer shall be identified for all business combinations”.
• Provide and explain a list of factors that may assist management to identify the acquiring entity.
• Explain why it is necessary to identify who is the acquirer in a business combination? (Adapted from Leo et al. Case 2, p.395).

Part B (19 Marks)
Sahara Ltd recently adopted the international accounting standards. The management of Sahara Ltd are seeking your advice regarding impairment testing under AASB 136 Impairment of Assets.
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* Explain how often the test needs to carried out * Explain what steps are to be followed in applying the impairment test * Explain the characteristics of goodwill, and how existence of goodwill affects the impairment test * Explain how the International Financial Reporting Standard IAS36 applies to this case. (Adapted from Leo et al. Case 2, p.450).

EXECUTIVE SUMMARY The purpose of this report was to address the “impairment testing” under AASB 136 to Sahara Ltd, who recently adopted international accounting standards. In the research of this report, the references has been taken from different sources which includes mainly, AASB 136 “Impairment of Assets”, Corporate Accounting in Australia by Dagwell and other sources as well like websites and articles and journals. Research of this report included a review of why and how often impairment testing needs to be carried out, steps need to apply the impairment testing, goodwill characteristics and how it affects impairment testing and how the international accounting financial standard IAS 36 applies to this case. The major findings indicate that AASB 136 is the amendment of IAS36 and incorporates almost the entire standard, while the difference lies in the compliance of the standards. That AASB 136 also complies with Not-For-Profit entities while IAS only complies with For-Profit entities. The

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