Fasb Codifcation Essay

Words: 896
Pages: 4

Linh Hoang
ACCT 322-001
GAAP Research Part I
Professional Research: FASB Codification Chapter 11 a. What is the authoritative guidance for asset impairment? Briefly discuss the scope of the standard (i.e., explain the types of transactions to which the standard applies) The authoritative guidance for asset impairment is to ensure that impairment is recorded and dealt with as depreciation. The scope of the standard is writing off of assets and depreciation. According to the guidance of 360-10-35, it address how long-lived assets that are intended to be held and used in an entity’s business shall be reviewed for impairment. The impairment loss can only be recognized if the carrying amount of a long-lived assets is not recoverable and
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Hence, the best evidence of fair value is the orderly market transactions. The valuation of fair value is the quoted prices in active markets for identical assets or liabilities, and the entity must have access to an active market for the item being valued. In the case the quoted market price is not available, accountant should make an estimate of fair value using the best information available in the circumstances. Fair value can be estimated based on market observables, it is applied to three situations: firstly, in less-active markets for identical assets and liabilities, however the market consensus about value is not strong. Secondly, when the owned assets and liabilities are similar to those traded in a market. In this case, the company has to make some assumptions of the fair value of reported items. Thirdly, situation exists when no active or less-active market exist for similar assets and liabilities, however, there are observable data allows the fair value to be estimated. Once the valuation is unobservable, the fair value is estimated by using a valuation technique. And the assumption used in the valuation technique are based upon inputs that are not observable in the market.
Work Cited
FASB Accounting Standards Codification Professional View. 360. Property, Plant, and Equipment, Subsequent Measurement.Asc.fasb.org. July 14, 2013