Long-Term Asset Impairment
In March of 1995 the Financial Accounting Standards Board issued Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The statement established accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used. The statement also established accounting standards for the disposal of long-lived assets and certain identifiable intangibles. (fasb.org/stsum121) However, shortly after Statement 121 was released numerous implementation issues were identified. Statement 121 also created measurement and presentation differences in the accounting for long-lived assets to be disposed of within the scope of Statement 121, and those under APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business". (BDO Seidman) Statement 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Opinion 30, therefore businesses accounted for the disposal or expected disposal of long-lived assets that were a segment of a business using one set of rules and the disposal of long-lived assets that were not a segment of a business using another standard. (Meeting and Luecke)
In order to resolve these problems the Board issued Statement 144 entitled "Accounting for the Impairment or Disposal of Long-Lived Assets" in late September 2001, effective for fiscal years beginning after December 15, 2001. The board felt that the issuance of Statement 144 provided a single accounting model for long-lived assets to be disposed of by sale that would eliminate the differences in accounting for those transactions and resolve the implementation and practice problems, associated with impairment, that were identified. Throughout the course of this paper the differences between Statement 144 and 121 will be identified, specifically when it comes to impairment
In order to resolve these problems the Board issued Statement 144 entitled "Accounting for the Impairment or Disposal of Long-Lived Assets" in late September 2001, effective for fiscal years beginning after December 15, 2001. The board felt that the issuance of Statement 144 provided a single accounting model for long-lived assets to be disposed of by sale that would eliminate the differences in accounting for those transactions and resolve the implementation and practice problems, associated with impairment, that were identified. Throughout the course of this paper the differences between Statement 144 and 121 will be identified, specifically when it comes to impairment
Bibliography: Soroosh, Jalel and Ciesielski, Jack T. "When good assets go bad" CPA Journal Dec. 2002. 10 Sept. 2005