Write 4 pages thesis on the topic impairments of intangible (including goodwill). Under the USA GAAP principle, the methodology used for the determination of the impairment of long lived assets is based on the two step approach. In the two steps approach, the first step requires test of recoverability. In this test, the comparison of the carrying amount and future amount of discounted cash flows from the using and disposing. In case, the assets are determined to be not recoverable than impairment testing conduct becomes mandatory. Contrary to this, in the IFRS system one step approach is employed. Under this system, the existence of the impairment indicators makes it mandatory for the application of the impairment testing (EY, a). The second major difference in the treatment of intangible assets in US GAAP and IFRS exist in calculation of the loss in the impairment of long lived assets. Under the system of US GAAP using FAS 157 entitled Fair Value Measurement is employed and the loss calculation is difference between the carrying amounts to the fair value amount. On the other hand, the IFRS system of financial reporting, the calculation of the loss is conducted by measuring the difference between the carrying amount and the recoverable amount. The recoverable amount is measured as either the fair value net of cost of selling or value in use or value indicating future value of discounted cash flow including the amount received after disposal.
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