Intangible assets impairment

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Intangibleassets impairment

IntangibleAssets Impairment

Allassets that are not physical in nature are referred to as intangibleassets. These include things such as trademarks, businessmethodologies, and patents. Most of these intangible assets are thefinal determinants of the performance of a company. This fact isespecially because of their increased contribution to the brandrecognition and also the goodwill of business. Everyone associatedwith accountancy and management has been aroused by the recentworldwide financial crisis.

Inbusiness, there are accounting numbers that play a significant rolein the appraisal of firms. These include dividends by the company toits shareholders, earnings and also the cash-flows recorded(Christensen&amp Nikolaev, 2013).Recently, these accounting numbers have proven to be crucial andattractive especially to parties that may want to value the businessfor their reasons. This paper seeks to explore and scrutinize theimpact that IAS 36 (Assets impairment) has on the assortment ofdifferent models of valuation and also on the choices of mostbusiness analysts.

Thefair value of a good, asset or a service it is unbiased and areasonable price estimate in a potential market. In the estimation ofthe fair value of a good or a service, factors such as the cost ofdistribution, cost of close substitutes, cost of production, cost ofacquisition, and costs of replacements have to be taken intoconsideration (Christensen&amp Nikolaev, 2013). Fair value accounting is when the fair value of goods and servicesare used in accounting. The fair value estimates, in this case, areexpected to pass information about the operating performance of thatservice or goods provider. Sometimes, however, assets may not beincorporated in estimating future cash flows. In the case of goodwillfor instance, or even for a corporate asset, such an asset belongs tothe corporate headquarters and is not taken as part of the business.

Reference

Christensen,H. B., &amp Nikolaev, V. V. (2013). Does fair value accounting fornon-financial assets pass the market test?&nbspReviewof Accounting Studies,&nbsp18(3),734-775.