Premium Essay

Eagle Company

In: Business and Management

Submitted By bmwoodbury
Words 1715
Pages 7
To: Eagle Company (Eagle)
Subject: Eagle in Italy and Eagle in Serbia Impairments
Date: May 7th 2014

1. For Eagle in Italy, is the building impaired under IFRS as of Dec. 31, 2013, and if so what is the amount of the impairment?

After reviewing the given facts provided by Eagle in Italy, we have determined that there is an impairment on their building under IFRS for the amount of $200,000. We have determined this through the use of IAS-36 as well as the calculations given below:
IAS 36-6 An impairment loss is the amount by which the carrying amount of the asset or a cash-generating unit exceeds its recoverable amount.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

Our recoverable amount then equals $900,000 because the value in use ($900,000) exceeds fair market value less costs to sell ($800,000).
IAS 36-59 If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss.

Recoverable Amount ($900,000) < Carrying Amount ($1,100,000)
Therefore, we shall recognize an impairment loss of $200,000
2. For Eagle in Italy, is the building impaired under U.S. GAAP as of Dec. 31, 2013, and if so what is the amount of the impairment?

After reviewing the given facts provided by Eagle in Italy, we have determined that there is not an impairment on their building under U.S. GAAP. We have determined this through the use of ASC Codification as well as the calculations given below:
ASC 360-10-35-17 An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of…...

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