buletin ştiin ific - Facultatea de Stiinte Economice - Universitatea din ...

The importance of actuarial accounting for the assessment of the elements of the financial statementsIn order to illustrate the method of evaluating the impairment loss, we shall use thefollowing application:The useful life of an item of equipment was estimated to be 12,000 hours of use at the momentwhen it was purchased. The number of products made is 5 pieces per hour and the assessed netcash flows derived from the sale of a product are 1o m.u./piece. At the end of the accountingperiod N, there are signs that the item of equipment has depreciated, due to the followingaspects:- the equipment was purchased at the beginning of N, for an acquisition cost of 588.000 m.u.- the cash flows are applied the discount rate of 10% ;- the fair value of the equipment is 480.000 m.u., while the transfer costs would be 8000 m.u. ;- in the accounting period N, the equipment was operated for 1500 hours ;- the managers of the company estimate that, during each of the 4 next years, the equipmentwill be operated for 2625 hours.Based on the above-mentioned data, we have:- the impairment of the equipment in N is : (588,000:12.000) x 1,500=73,500 m.u.;- the net book value of the equipment is: 588,000-73,500= 514,500 m.u.- the fair value lass the costs to sell =480,000-8,000=472,000 m.u.- the utility value is calculated in the table below:Table no:2The calculation of the future cash flows with a discount rate of 10 %Year Cash flows The discounted valueN+1 1,500 hours x 5 pieces x 10 m.u .= 75,000 m.u. 75,000 x 1.01 -1= =74,257N+2 2,625 hours x 5 pieces x 10 u.m. = 131,250 m.u. 131,250 x 1.01 -2 =128,664N+3 2,625 hours x 5 pieces x 10 u.m. = 131,250 m.u. 131,250 x 1.01 -3 =127,390N+4 2,625 hours x 5 pieces x 10 u.m. = 131,250 m.u. 131,250 x 1.01 -4 = 126,129The utility456,440valueThe recoverable value is max. (472,000, 456,440) = 472,000 m.u. The conclusion is that theequipment should be recognized at the level of the recoverable value, which means that theimpairment loss is 588,000- 456,440=131,550 which is recognized in the profit and loss accountand is entered as follows:Expenses related to provisions fordepreciation of assets= Provisions for thedepreciation of equipments,means of transport, animalsand plantations131,5504. Impairment of goodwill and the allocation of goodwill to the cash-generating unitsWhenever there is a sign that the unit is likely to be impaired, a cash-generating unit towhich goodwill was allocated will be tested annually for impairment. The annual test forimpairment of a cash-generating unit to which goodwill was allocated can be performed at anymoment, in the course of one year, on condition that this moment should be the same each year.If the recoverable value of the unit exceeds its book value, the unit and the goodwillallocated to this unit are not deemed impaired. If the book value of the unit exceeds therecoverable value of this unit, the entity should recognize an impairment loss.The assets of the corporations do not generate cash flows individually from other assets orasset groups and their book value is not entirely attributed to the reviewed cash-generating unit.65