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6 Cards in this Set
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Criteria How should Smooth Sailing perform the recoverability test? What assets and liabilities should be included in the asset group? How should the multiple scenarios impact the recoverability test? How does foreclosure affect the recoverability test? How does the extinguishment debt affect the recoverability test? What impairment loss should be recorded on December 31,2010? How would the change of probability affect recoverability and the impairment test? |
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Recoverability Test According to FASB ASC 360-10-35-21 A long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The following are examples of such events or changes in circumstances: b. A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition e. A current-period operating or cash flow loss combined with a history of operating or cash flow losses f. A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50%
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A Foreclosures Impact on Recoverability Test ASC 360-10 (Presentation of long lived assets to be disposed of other than by sale) ASC 360-10-45-15 A long-lived asset to be disposed of other than by sale shall continue to be classified as held and used until it is disposed of. If a long-lived asset is to be abandoned or distributed to owners in a spinoff together with other assets (and liabilities) as a group and that disposal group is a component of an entity |
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Impairment Test: Step One * In this case, there is a possibility of impairment because of an increased presence of pirates in the area in which Smooth Sailing cruises, the cruise ship’s operating performance has significantly declined, which has directly contributed to a decline in its overall fair value. |
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Impairment Test |
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Impairment Test with Alternative Probabilities
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