"Asset Impairments: The Recession of 2008-2009"
From the case study, compare the disclosure notes provided in Nestle, Swatch Group, and Royal Bank of Scotland with the disclosure notes of News Corp and CBS Corporation. Explain which disclosure notes are more informative to the stakeholders in the evaluation of the financial statements.
Contrast the difference between the impairment testing of goodwill and the impairment testing requirements for other assets. Examine the purpose of the differences identified in testing impairment of goodwill and other assets.
This case explains various methods firms use to compute cost under U.S. GAAP and IFRS. The case includes discussions of: historical cost; lower of cost or market (U.S. GAAP); lower of cost or net realizable value (IFRS); fair value under IFRS and U.S. GAAP, and; impairment for goodwill and other assets under both IFRS and U.S. GAAP.
The case then provides impairment notes for three IFRS reporting firms (Nestle, Swatch Group, and Royal Bank of Scotland) and two U.S. GAAP reporting firms (News Corp and CBS Corporation). The IFRS reporting firms have far more detailed disclosures and the disclosures are considerably more informative.
The case is a good introduction to various cost measures. It also provides a good overview of impairment testing and impairment disclosures under IFRS and U.S. GAAP. The case can be used with Vivendi Group: Goodwill Impairment Test (Chapter 4), which provides the impairment disclosure note for Vivendi, a disclosure that is more detailed than any of the five disclosures in this case.