The Impact of Assets Impairment on Company Accounts

Topics: Balance sheet, Goodwill, Generally Accepted Accounting Principles Pages: 16 (4698 words) Published: December 4, 2012
The Impact of Assets Impairment on Company Accounts

Assignment 1

ACCT 20054 – Company Accounting
Term 2, 2012

Prepared & Submitted by
Jobish Mathew

Tutor: Davood Alizadeh
Due date: 24th August 2012
Submitted date: 24th August 2012

Executive Summary

The study ‘The Impact of Assets Impairment on Company Accounts’ presents the cotemporary issues facing by major five Australian companies Qantas, Ten Networks, Billabong, Bluescope steel and Harvey Norman. This research mainly deals with controversies surrounding the recent introduction and application of ‘fair value’ measurement system by the IASB and AASB.

The author refers an article written by Adele Ferguson published in ‘The Age’ newspaper on 14th june 2012. This article refers the possible assets write downs by many Australian companies. And it also refers the Australian accounting standard and possible measures AISC (Australian Securities and Investment Commission).

This research also analyses the five companies’ annual report and make information related to market capitalisation, book value, share price movement and so on. The tables and graph provide great detailed comparisons between those companies. Further, the study examines whether the companies have done any impairment of their assets. The report also analyses how the companies have done the impairment and why they have done.

The study also examines each individual asset class reported by the companies and the valuation principles followed by the companies. Moreover, the report mentions how the anomalies between companies are going to affect the users/analysts.

Finally, the research discuss how ASIC going to enforce the accounting standard on companies and the role of auditors in this exercise.


Consistent falls in share price and market capitalisation are the main contemporary issues of many Australian companies. This research tries to go through the details of these current issues. For this purpose the study consider five major Australian companies to examine their market conditions and related issues.

The report consist of the details (in table and graph formate) of five companies annual reports. This provides great information about the present situation of those companies. After that, the study deals with the accounting standard which is impairment test, essential for book value treatment in balance sheet.

The report considers the impact and application of impairment test in those five companies and analyse how they have done it. The study also deals with the reasons for the impairment losses which have experienced by those companies.

Moreover, the report provides the impact of impairment tests among the investors and other analysts. Finally, the study considers the role of ASIC and auditors to enforce the accounting standard on companies.

Requirement 1:Data presentation include share price, number of outstanding shares, market capitalisation, percentage changes in market capitalisation and book value (net assets) of Qantas, Ten Networks, Billabong, Bluescope Steel and Harvey Norman companies during the period of 2009-2011 and current date (As on 17/08/12)*. | Data Points|

Companies & Data| End of 2008-09| Middle of 2009-10| End of 2009-10| Middle of 2010-11| End of 2010-11| Current Data As on 17/8/12| QANTAS| S.P*| $ 2.01| 2.99| 2.20| 2.54| 1.84| 1.145| | No. of O. S* (millions)| 2265| 2265| 2265| 2265| 2265| 2265| | M.C*(Millions)| $ 4553| 6772| 4983| 5753| 4167| 2593| | % changes in M.C| --| 48.74| (26.42)| 15.45| (27.57)| (37.77)| | B.V* (Millions)| $ 5765| 5755| 5981| 6030| 6151| --| | % changes in B.V| --| (0.17)| 3.93| 0.82| 2.01| --| TENNETWORKS| S.P*| $ 1.25| 1.74| 1.37| 1.32| 0.94| 0.45| | No. of O. S* (millions)| 1045| 1045| 1045| 1045| 1045| 1045| | M.C*(Millions)| $ 1306| 1818| 1432| 1379| 982| 470| | % changes...
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