Term
| What is the step for determining asset impairment? |
|
Definition
| If future cash flows from asset is less than net book value then it is impaired |
|
|
Term
| How do you calculate net book value? |
|
Definition
| Take purchase price of the asset minus the accumulated depreciation expense which is computed |
|
|
Term
| How do you calculate accumulated depreciation expense? |
|
Definition
1) Calculate (Purchase prices of asset - salvage value) / useful life
2) Multiply above by the number of periods gone by (usually years) |
|
|
Term
| What are the two steps in determining if goodwill is impaired? |
|
Definition
1) Compare current market value of company to net book value. If it is less than the book value, continue
2) Calculate implied goodwill and if it is less than the current goodwill it is impaired |
|
|
Term
| How do you calculate implied goodwill? |
|
Definition
| Market value of company - net assets (minus goodwill) |
|
|
Term
| How do you calculate net assets? |
|
Definition
|
|
Term
| What's another name for owner's equity |
|
Definition
|
|
