Question:
1. The company controller, Barry Melrose, has asked for your help in interpreting the authoritative accounting literature that addresses the recognition and measurement of impairment losses for property, plant, and equipment and goodwill. Ac€A?We have a significant amount of goodwill on our books from last yearAc€?cs acquisition of Churchill Corporation. Also, I think we may have a problem with the assets of some of our factories out West. And one of our divisions is currently considering disposing of a large group of depreciable assets? Your task as assistant controller is to research the issue.
Required:
Obtain the relevant authoritative literature on accounting for the impairment of property, plant, and equipment and intangible assets using the FASBA Codification Research System. Answer the following questions by citing the paragraph from FASB codification and providing specific codification number.
1. a) When should property, plant, and equipment and goodwill be tested for impairment? (Goodwill: optional)
2. b) Explain the process for measuring an impairment loss for property, plant, and equipment and goodwill to be held and used. (Goodwill: optional)
3. c) What are the specific criteria that must be met for an asset or asset group to be classified as held- for- sale?
4. d) Explain the process for measuring an impairment loss for property, plant, and equipment classified as held- for- sale.
2. 2) Determine the specific citation for accounting for each of the following items:
1. a) The criteria for determining commercial substance in a nonmonetary exchange.
2. b) Goodwill should not be amortized.
3. c) If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed.