IFA61 – Asset Impairment: US GAAP vs. IFRS – Intermediate Accounting

Download the Workbook: http://www.tonybell.com Unlock 100+ Members Accounting Tutorials: https://www.youtube.com/channel/UCNFClg6mzfZ5ixpuH9c7f1A/join In This Video: We wrap up Module 11 by working through Problem 11-6A, comparing the strict rules for asset impairment under both US GAAP and IFRS. Using a scenario where Cascade Timber's saw-line machinery may be impaired due to new environmental regulations, we determine the asset's carrying value and evaluate its future cash flows. In Part 1, we apply the US GAAP two-step model: performing the recoverability test (comparing undiscounted future cash flows to carrying value) and then, if necessary, measuring the impairment loss down to fair value. In Part 2, we switch to IFRS, demonstrating how to find the "recoverable amount" by comparing the asset's value-in-use against its net resale value. For both frameworks, we alter the cash flow projections to see exactly what triggers a write-down and prepare the resulting journal entries. Module Overview (IFA53–IFA61): This module explores the systematic allocation of asset costs and the rules for write-downs. We will examine the major depreciation methods (Straight-Line, Declining Balance, and Units-of-Production), handle partial-year depreciation, and navigate changes in accounting estimates. We will also dive into the specific calculations required for depleting natural resources and walk step-by-step through the strict testing rules and journal entries for asset impairment.