economicz

well they make it clear you should use UNDISCOUNTED cashflows to test for impairment under GAAP.....

so say your undiscounted cash flows sum up to 100 and your bv is 90, the test said it is impaired.

now the next step is to measure the impairment.

the say impair down to fair value or discounted cash flows if no fair value estimate is available...

in the absance of fair value it will always workout cause discounted cash flows are always less than undiscounted cash flows. and thus less than book value since we have already tested that in step one...

when a fair value exists, what if it is greater than undiscounted cash flows? and they tell you to use fair value when it is available....



Edited 1 time(s). Last edit at Wednesday, May 4, 2011 at 01:32PM by gulfcfa.