Corporate Finance for Introduction to Accounting- myassignmenthelp

Question: Discuss about theCorporate Finance for Short Introduction to Accounting. Answer: Introduction A cash-generating unit is the smallest identifiable group of assets capable of generating cash inflows that are, to a large extent, independent of cash flows derived from other assets or groups of assets. Impairment is important and therefore,An organization should evaluate if there are indications that any asset or, if applicable, any cash-generating unit may be impaired, in which case, it must estimate its recoverable amounts by making any applicable corrections (Hitchner, Hyden and Mard, 2013). intangible assets are irreplaceable as a source of cash flow generation for a number of entities around the world. The presentation and disclosure of information of this item constitutes a challenge for the accounting systems and for the profession in general.International regulatory agencies have expressed the need to achieve a high degree of standardization in accounting practices, the subject of intangible accounting is at the apex of the pyramid in issues of importance and topicality (H itchner, Hyden and Mard, 2013).This paper presents a summary of the basic criteria for accounting for intangible assets by several accounting standard setting bodies in the world. The term "purchased goodwill" and "intangible asset" is sometimes referred to as synonymous, but the differences between the two are deep; the definition of acquired goodwill evidences it:Goodwill is the future economic benefits from assets that have not been individually identifiable and recognized separately."The calculation of the useful life can be determined by reference to the time or units of production. Assets with an indefinite useful life are not amortized. The entity shall disclose all relevant information according to the "usefulness paradigm for decision making". It seeks the adequate information to the users framed within groups of interest, as is deduced from the pretension of the New International Financial Architecture. Impairment loss In case the company must recognize an impairment loss of a cash-generating unit to which all or part of a goodwill has been allotted, it will first reduce the book value of the goodwill corresponding to that unit. If the impairment exceeds the amount of the latter, secondly, it will reduce in proportion to its book value the other assets of the cash-generating unit, up to the limit of the greater of the following: its fair value less costs to sell and its value in use (Rajasekaran and Lalitha, 2011). Assets with definite or indefinite useful lives The 5th standard of valuation of the General Accounting Plan, related to intangible assets, establishes that for the subsequent valuation of the same it must be assessed whether the useful life of the intangible fixed assets is defined or indefinite. Problem of impairment of goodwill :We know that a fixed asset with a definite useful life will be amortized in a systematic and rational way, taking into account its life and residual value.On the other hand, an asset with an indefinite useful life will not be amortized, although its possible deterioration should be analyzed, whenever there is evidence of it, at least annually (Anil Kumar, Kumar and Mariyappa, 2010). How this affects the Goodwill The Goodwill may only be included in the asset when its value is evidenced by an onerous acquisition, in the context of a business combination. Goodwill will not be amortized. Instead, the cash-generating units to which the goodwill has been allocated shall be subject at least annually to the impairment test, where appropriate to the recording of the impairment charge. The impairment losses recognized in the goodwill will not be reversed in subsequent periods. How we interpret this When we acquire a business in progress, we assume both its assets and its liabilities. The difference between one and the other would be the net value of the business but, nevertheless, we must pay a higher price for it, this would be the Goodwill.The goodwill, therefore, appears as an intangible asset in a business combination and will remain there, without being amortized, until we are aware of its possible deterioration (Sellhorn, 2004). If over time we estimate the impairment, at the end of the year we must do the following: First, we must calculate the value of the cash generating unit where the fund is recognized. That is, we assume that the business in progress had a series of assets and liabilities that, over time, will have changed (debts that have been paid, clients that we have already collected, items of property that are being amortized, etc.) (Hitchner, Hyden and Mard, 2013).Second, We compare it with the current value of the cash flows that we estimate will generate this cash-generating unit. If, in fact, we understand that there is a impairment, we take it as a valuation correction of the Goodwill; taking into account that, since it is not reversible, we must pay it in the Fund's own account. In the event that the company must recognize an impairment loss of a cash-generating unit to which all or part of a goodwill has been allotted, it will first reduce the book value of the goodwill corresponding to that unit. If the deterioration exceeds the amount of this second, it will reduce in proportion to its book value the remaining assets of the unit generating cash.Therefore, we first account for the deterioration of the Goodwill, paying in its own account, since it is not reversible (Barker, 2011). The historical value of these assets must correspond to the amount of clearly identifiable expenditures in which they are actually incurred or must be incurred in order to acquire, form or use them. , which, when applicable, should be re-expressed as a consequence of inflation. Acceptable methods for amortizing them are straight-line items, production units and others of recognized technical value, which are adequate according to the nature of the corresponding asset. Also in this case must choose the one that best complies with the basic standard of association (Weil, 2017). Conclusion Impairment losses consist of asset value adjustments (current assets, property, plant and equipment, intangible assets, financial instruments) that correspond to impairment losses reversible. "An impairment loss on the value of an item of property, plant and equipment when its book value exceeds its recoverable amount, this being understood as the greater of its fair value less costs to sell and its value in use. The recognition of this loss generates an expense in the profit and loss account, as well as its reversion, an income (Thomas and Ward, 2015). It should be taken into account that the reversal of the impairment shall be limited to the book value of the property, which would be recognized at the date of reversal if the impairment had not been recorded. References Anil Kumar, S., Kumar, V. and Mariyappa, B. (2010).Corporate accounting. Mumbai [India]: Himalaya Pub. House. Barker, R. (2011).Short introduction to accounting. Cambridge: Cambridge University Press. Harrington, J., Nunes, C. and Roland, G. (2010).2010 goodwill impairment study. [Morristown, N.J.]: Financial Executives Research Foundation. Hitchner, J., Hyden, S. and Mard, M. (2013).Valuation for financial reporting. Hoboken, N.J.: Wiley. Rajasekaran, V. and Lalitha, R. (2011).Corporate accounting. Noida, India: Pearson. Sellhorn, T. (2004).Goodwill impairment. Frankfurt am Main: Peter Lang. Thomas, A. and Ward, A. (2015).Introduction to financial accounting. London: McGraw-Hill Education. Weil, R. (2017).Financial accounting. [Place of publication not identified]: Cengage Learning.