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This paper explores whether the recognition of asset impairments provides an opportunity for earnings management by examining changes in the performance. First, we apply a dynamic data envelopment analysis model to evaluate the operating performance of Taiwanese electronics firms for the period from 2004 to 2013. Statistical tests are next applied to assess the average efficiency variation between the periods before and after firms recognise asset impairments. Several empirical findings are as follows: managers recognise asset impairments when their firms have poor performance as compared to other firms that do not record any asset impairments recognition, and that their performance keeps on improving in both the year of recognising asset impairments and the year after asset impairments recognition. That is, managers tend to recognise asset impairments to improve operating performance, while the firms are performing poorly, supporting the opportunistic behaviour theory. [ABSTRACT FROM AUTHOR]

The use of fair value measures in financial statements embeds managerial assumptions about the future into the reporting process. This is particularly so for Level 3 measurements that are developed from financial models of future cash flows. This article documents a case where a firm bought a majority stake of 52% in November 2009 of a subsidiary where it already had an equity holding of 29% (i.e., acquired an additional 23%). The proportionate fair value implied for the 48% noncontrolling stake as well as the 29% prior equity holding in the acquired firm using Level 3 methodology was roughly triple the amount reported as Level 1 measures for these very same holdings. The discrepancy in valuation boosted the bargain gain at acquisition wiping out the retained earnings deficit of the parent firm. In addition, the acquirer reported a US$200 million (40%) impairment of the subsidiaries’ primary asset (housing stock) in November 2009 whereas the subsidiary reported the unimpaired value in its year-end financial statements in December 2009. While we agree that Level 3 valuations potentially provide useful information to shareholders, they can fulfill this role only if the disclosures can be effectively audited. Our primary motivation in writing this article is to show that fair value disclosures are not being audited sufficiently rigorously in practice and to make some suggestions on how these rules may be improved. [ABSTRACT FROM PUBLISHER]

We investigate the impact of recurring fair value versus amortized cost measurement for accounting recognition purposes on the timeliness of insurers' other-than-temporary (OTT) impairments of non-agency residential mortgage-backed securities (NAMBS) around the 2007–2009 financial crisis. Unlike largely predetermined amortized cost measurement, recurring fair value measurement requires firms to invest in information and control systems to assess relevant economic conditions and estimate fair values quarterly. We expect these systems discipline insurers' OTT impairments. Exploiting statutory requirements that PC (life) insurers measure securities with NAIC designations from 3 to 5 at fair value (amortized cost) and disclose security-level accounting information, we predict and find that PC insurers record timelier OTT impairments of the same NAMBS with NAIC designations of 3 to 5 than life insurers. We predict and find weaker evidence of spillover effects to the timeliness of OTT impairments of the same NAMBS with NAIC designations of 1 or 2. JEL Classifications: G22; M41. Data Availability: Data are available from public sources cited in the text. [ABSTRACT FROM AUTHOR]

Shimin Chen, Yuetang Wang, and Ziye Zhao (2009) examine motivations for managers of Chinese-listed firms to report asset impairment reversals. The study documents that the reporting of such reversals reflects incentives to avoid delisting from Chinese stock exchanges and that stronger monitoring mechanisms attenuate this opportunistic reporting. The study exploits a unique feature of financial reporting within China, which allows large sample investigation of impairment reversals. I discuss the study's strengths, note some limitations on the analyses and inferences, and suggest recommendations for future research. [ABSTRACT FROM AUTHOR]

While asset impairment reversals are practiced in many jurisdictions, empirical evidence is rare. China provides us with a unique opportunity to examine both the determinants and consequences of impairment reversals resulting from recent developments in standard-setting and its specific performance-based listing requirements. Based on a sample of reversal firms in China, we report the following findings: First, Chinese-listed companies are motivated by regulatory incentives to reverse asset impairments to reduce or avoid the possibility of trading suspension or de-listing. Second, we provide some evidence that the value-relevance of reversal information appears to be negatively affected by the regulatory-motivated earnings management. Third, favorable internal and external monitoring mechanisms play a role in constraining this type of earnings management. Taken together, we conclude that while the intention of granting reversal discretion is for managers to reveal private value recovery information, our findings suggest that a seemingly improved accounting standard does not necessarily lead to its intended consequence in financial reporting. [ABSTRACT FROM AUTHOR]

We use a controlled laboratory environment to provide evidence on the potential efficacy of the replacement of the Incurred Credit Loss (ICL) Model of International Accounting Standard (IAS 39) by the Expected Credit Loss (ECL) model of IFRS 9 to account for credit impairment losses. We focus on the simplified version of the ECL model using an uncertain production environment as the context. We induce incentives consistent with the existing rigid rule-based ICL model and the proposed forward-looking principle-based ECL model. Our primary finding is that the combined effects of eliminating the minimum 'probable' threshold condition together with allowing managers to incorporate forward-looking information increase both the amount and adequacy of periodic reserve decisions. In addition, we analyze the effects of increased flexibility under the new credit-loss model on earnings management using three different compensation schemes. We find that while the replacement of the ICL model with the ECL model facilitates higher reserves, the resulting increased earnings management varies across compensation schemes, is less than predicted, and does not offset the potential of the ECL model's positive effects. The results provide ex ante evidence on the likely intended and unintended consequences of implementing the ECL model. [ABSTRACT FROM AUTHOR]

The article reports on write-offs on financial statements in the U.S. with commentary on a paper by Lynn Rees, Susan Gill, and Richard Gore. Rees and colleagues researched the management of write-offs and whether managers have a greater incidence of managing operating accruals when they've taken write-offs and if this is true then is it because they wish to publish value-relevant signals as opposed to acting opportunistically. The author feels that there is too much focus on manipulation of financial statements.

The article reports on abnormal accruals for firms with permanent asset impairments in their financial statements. Research was done on how to assess the management of earnings in the U.S. when write-offs occur. The study is different from previous ones in that the researchers do not believe that earnings management is an opportunistic behavior. They use a model of abnormal accruals as a control for fluctuations in the firm's economic environment and find that these are negative when the period examined has write-offs.

This paper investigates impairment and depreciation accounting in the 13th to 15th century. It finds that the first known instance of impairment accounting was in 1321, while for depreciation, it was 1399 not, as has previously been claimed, 1299. The study demonstrates the difference in approach at that time between the two forms of adjustment and shows that impairment was the original form of adjustment for reduction in asset values, a form that was applied in situations where physical assets had been lost, or deteriorated, or devalued over the reporting period. In contrast, depreciation was algorithmic, linked to a time-based straight-line depreciation charge equivalent to 10 percent per annum. These findings not only relocate recognition of the emergence of depreciation provisions to the end of the 14th century but, also, from France to Spain. However, in both cases, in Italian firms with Italian accountants. [ABSTRACT FROM AUTHOR]

This paper investigates the predictive value of tangible long-lived asset impairments for changes in future operating cash flows under U.S. GAAP and IFRS. We find that impairments reported under IFRS are negatively associated with changes in future operating cash flows, whereas those under U.S. GAAP, on average, are not. We investigate whether differences in the predictive value are attributable to differences in recognition or measurement, providing evidence suggesting that impairment recognition under U.S. GAAP is delayed. Evidence also suggests that the value-in-use measurement attribute, allowed under IFRS, does not induce under-impairing as IFRS and U.S. GAAP impairments are similarly related to future impairments. The main result of a negative association under IFRS, but not U.S. GAAP, holds after considering future impairments to control for measurement differences, macro-economic factors, and firm reporting incentives. Further, impairment losses under IFRS are more predictive in high-enforcement countries. [ABSTRACT FROM AUTHOR]

We report that firms reversing impairments under IAS 36 are not more incentivized to engage in earnings management and do not actually engage in more earnings management than a control sample matched on size and industry. We observe that reversals are positively associated with stock market valuation changes but not with future operating performance. Bifurcating our reversal firms into earnings managers and other firms, we report that the impairment reversals of the latter are positively associated with future firm performance and current stock market returns, while those of the former are negatively associated with future operating performance and are unrelated to stock valuation. Thus, while on average impairment reversals are undertaken in an unbiased manner, a minority of firms exploit the latitude provided by this fair value accounting standard to manage earnings upward. This research provides useful information to accounting standard setters pertaining to the adoption of fair value accounting methods. It also assists investment analysts by demonstrating how to detect opportunistic reversals of impairments. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this study is to examine the efficacy of corporate governance systems in enhancing earnings quality during the recent global financial crisis (GFC). The literature provides insight into the corporate governance–accruals quality relationship during periods of relative financial stability. However, little is known about periods of unexpected financial shocks such as the GFC.Design/methodology/approach The sample consists of 340 companies (1,020 firm years) listed on the ASX during 2007-2009. Factor analysis is used to compute corporate governance factors. Seemingly unrelated regression (SUR) is used to test the impact of pre-GFC corporate governance on accruals quality during the GFC.Findings Consistent with prior research, the findings suggest that good corporate governance is positively related to accruals quality before the GFC. More importantly, the impact of good governance intensifies during the GFC, where the mitigating role of governance is arguably under pressure. Furthermore, during the GFC, good corporate governance also affects the level of asset impairment.Research limitations/implications The study provides empirical evidence that the relationship between good corporate governance practices and accruals quality is amplified during the GFC. The results support the efforts of market regulators to improve the governance of companies and make them stronger during financial crises.Originality/value The study is an important addition to corporate governance research because it tests governance dynamics in a unique crisis period and establishes that corporate governance structures are effective when most needed. [ABSTRACT FROM AUTHOR]

This study evaluates how managers of Australian firms are implementing the regulation requiring the impairment of assets and whether asset impairments can be categorised as non-discretionary. We find some evidence that realised asset impairments are reflective of regulatory requirements. However, for the majority of firms exhibiting at least one externally observable indicator of impairment, they are not recognising asset impairments, and recognition is often delayed. Accordingly, while realised asset impairments might be categorised non-discretionary, the timing of their recognition appears highly discretionary. There is some evidence that the realisation of asset impairments increased subsequent to transition to IFRS; however, the majority of firms with indicators of impairment are still not recognising asset impairments. [ABSTRACT FROM AUTHOR]

Prior literature finds higher audit fees after the adoption of International Financial Reporting Standards ( IFRS). We add to this research by documenting that the post- IFRS increase in audit fees is persistent, and not a short-term effect driven by transitional costs. In addition, early adopters have higher audit fees and this difference continues after IFRS adoption. Next, we consider the effect of increased effort required under IFRS on marginal pricing. Our results find lower (higher) marginal pricing post- IFRS for PwC and Deloitte ( EY), suggesting that they have a relatively higher (lower) fixed and lower (higher) variable cost structure. [ABSTRACT FROM AUTHOR]

This article discusses the paper by Bond, Govendir, and Wells (2016). The comments focus on four issues: (i) the evaluation of the book to market ratio of equity as an impairment indicator; (ii) the managerial discretion on realized impairments; (iii) the interpretation of the increase in asset impairment after transition to IFRS; and (iv) the role of cross-sectional analysis in investigating asset impairments. [ABSTRACT FROM AUTHOR]

Scientific findings support the existence of nine planetary boundaries which define a safe operating space for humanity and the conditions necessary to sustain human life. The declining state of the environment (4 of the 9 boundaries have been breached) creates significant risk factors for asset impairment. Risks result not only from environmental challenges and resulting resource constraints (e.g. limits to fossil fuel extraction and carbon constraints) but also changing technology landscapes and social expectations. This article is one of the first to discuss the implications of changes in planetary boundary conditions for asset impairment and recognising an impairment event and sets out an agenda for future research. [ABSTRACT FROM AUTHOR]

The purpose of this article is to present some theoretical and practical aspects regarding the use of modeling in accounting. The paper defines the concepts of modeling and accounting model, and continues with a case study referring to a collective evaluation of impaired assets. Because of the importance of accounting information in the financial statements and not only, we analyzed the relationship between the models, the information systems and the modeling process. As a conclusion, we support the idea that by introducing the modeling process in accounting, we obtain a superior quality of the accounting information. [ABSTRACT FROM AUTHOR]

This case originates from a real-life business situation and illustrates the application of impairment tests in accordance with IFRS and U.S. GAAP. In the first part of the case study, students examine conceptual questions of impairment tests under IFRS and U.S. GAAP with respect to applicable accounting standards, definitions, value concepts, and frequency of application. In addition, the case encourages students to discuss the impairment regime from an economic point of view. The second part of the instructional resource continues to provide instructors with the flexibility of applying U.S. GAAP and/or IFRS when students are asked to test a long-lived asset for impairment and, if necessary, allocate any potential impairment. This latter part demonstrates that impairment tests require professional judgment that students are to exercise in the case. [ABSTRACT FROM AUTHOR]

We study the effect of mandatory adoption of International Financial Reporting Standards (IFRS) in Europe in 2005 on conditional conservatism. We capture conditional conservatism with a modified version of the Khan and Watts measure (C_Score) that also controls for potential shifts in unconditional conservatism and cost of capital. From a sample of 13,711 firm-year observations drawn from 16 European countries spanning the 2000-2010 period, we document an overall decline in the degree of conditional conservatism after the adoption of IFRS. We show that the decline in conditional conservatism is less pronounced for countries with high quality audit environments and strong enforcement of compliance with accounting standards using the Brown et al. audit and enforcement index. As asset impairment tests are a key mechanism ensuring conditional conservatism in the IFRS framework, we further examine these. We show that firms booking an asset impairment present a smaller decline in the degree of conditional conservatism relative to firms that do not. We also demonstrate that firms that do not book an asset impairment when evidence suggests the probable need to do so experience a more pronounced reduction in conditional conservatism. We argue that IFRS are conceptually conditionally conservative but that inappropriate application of conditional conservatism principles is likely to prevent financial reporting from reaching the level of conservatism targeted by the International Accounting Standards Board (IASB). [ABSTRACT FROM AUTHOR]

This paper examines how the reversibility of the accounting effect of asset impairments affects managers' investment decisions. We conduct two experiments in which participants act as CEO of a multi-division electronics company that suffers a large asset impairment at one of the divisions. Drawing on prior psychology research involving cognitive dissonance and decision reversibility, we predict and find that managers who are responsible for the decision to record the asset impairment invest more in the impaired division when the accounting effect of the impairment is reversible than when it is irreversible. This is consistent with the idea that reversible accounting effects encourage behavioral attempts to alter the cash flow outcome, while irreversible accounting effects encourage belief revision to rationalize the cash flow outcome. Also in line with cognitive dissonance theory, we show that managers who are not responsible for the decision to impair the asset, or managers who are given the opportunity to deny responsibility for the asset impairment, do not differ in their investment in the impaired division, regardless of impairment reversibility. [ABSTRACT FROM AUTHOR]

The International Financial Reporting Standards (IFRS) goodwill impairment testing regime has been in place in Australia for almost a decade. One of the burning issues arising from the adoption of the IFRS regime is whether firms have impaired goodwill in a timely manner. This study examines the timing of goodwill impairment decisions in the Australian context during the period 2007 to 2009. It is evident that a non-trivial number of firms did not impair goodwill as called for under the standard governing asset impairment. [ABSTRACT FROM AUTHOR]

Copyright of Accounting Perspectives is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The goal of this paper is to examine the level of involvement of all major stakeholder groups in the development of new accounting rules regarding the impairment of financial assets through the submission of comment letters on the ED/2009/12 on Impairment and also their level of support/opposition for the aforementioned ED. The findings confirmed the ever-growing interest for the subject of accounting for financial instruments. The big number of comment letters submitted by all stakeholder interest groups from all over the world highlighted that fact. Nevertheless, Europeans and preparers reacted the most by sending the largest number of letters. Content analysis of the 192 comment letters analyzed in this paper revealed split views over the ED. Accounting profession and users were the only stakeholders to rather agree with the ED, while almost half of the preparers disagreed. In terms of geographical distribution, the strongest opposition came from Europe and Australia, while international organizations displayed more balanced views. [ABSTRACT FROM AUTHOR]

Copyright of Accounting Perspectives is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The financial crisis has demonstrated that banks may end up holding toxic or impaired assets that harm their perceived solvency and liquidity.To address that difficulty, the European Commission has issued policy guidelines defining to what extent such banks can be relieved from impaired assets under the rules on State aids.An important question in that regard is the assessment of whether any assistance from governments may distort competition between financial institutions. [ABSTRACT FROM PUBLISHER]

Abstract: This paper investigates the practice of asset impairment in large listed UK corporations before and after the change in the regulatory environment to International Financial Reporting Standards. The results find that overall implementation of an asset impairment charge results in a greater amount of income smoothing as opposed to big bath accounting, but that post the change in the regulatory environment, the extent of big bath accounting increases. [Copyright &y& Elsevier]

The article analyses the determinants of the magnitude and occurrence of asset impairments for companies that are listed on the Warsaw Stock Exchange in Warsaw, Poland. It hypothesises that magnitude of asset impairment and impairment disclosure probability depending on company economic performance, write-offs and recurrence effect. It also provides that evidence that asset impairment is more influenced by senior management changes than company financial performance.

In this paper, we present the results of an experiment that investigates the effects of two factors—auditors' negotiation experience and client negotiation style—on auditors' perceived ultimate negotiation outcome in terms of an asset impairment writedown. We show that negotiation experience leads to a higher perceived ultimate negotiated writedown for a client with a contentious negotiation style, suggesting that negotiation experience reaps benefits when it is needed most (i.e., when the client is difficult to deal with). Negotiation experience has no effect for a client with a collaborative negotiation style. We also find that the effect of client negotiation style on auditors' perceived negotiation outcome is contingent on the auditors' negotiation experience. Inexperienced auditors perceive a lower ultimate negotiated writedown when dealing with a contentious rather than a collaborative negotiation style client. In contrast, experienced auditors' perceived negotiation writedown is not affected by the client negotiation style. [ABSTRACT FROM AUTHOR]

As perdas para redução ao valor recuperável de ativos estão inseridas no contexto de que os ativos não podem ser registrados por valor superior ao seu valor recuperável, mediante uso ou venda do ativo pela empresa. No setor petrolífero, a representatividade dos ativos de exploração e produção é relevante e significativa. Por isso, a prática no setor não é recente e data da década de 70. Além disso, as empresas petrolíferas são obrigadas a publicar informações adicionais relativas às suas atividades típicas. Assim, o objetivo é analisar como essas informações adicionais das atividades de exploração e produção de petróleo de empresas petrolíferas se relacionam com as perdas por impairment em ativos de E&P. Realizou-se uma regressão com dados em painel, utilizando-se 212 observações de 53 empresas petrolíferas referentes ao período de 2005 a 2008. As conclusões sugerem que as variáveis preço do barril; reservas provadas não desenvolvidas; realção reserva x produção; gastos de desenvolvimento incorridos; valorização padronizado das reservas e ganho por barril são relevantes para o reconhecimento de perdas para redução ao valor recuperável em ativos de E&P. A escassez de pesquisas empíricas dá importância a esse estudo, mas a mesma possui limitações e suas conclusões ficam restritas à amostra, às variáveis e à ferramenta econométrica utilizada. [ABSTRACT FROM AUTHOR]

Accounting for asset write-downs has received substantial media attention throughout the Global Financial Crisis and has been the subject of academic debate and numerous accounting regulations during the past three decades. This study provides evidence of the magnitude and frequency of quarterly asset write-down activities for a sample of US firms between 2001 and 2008 and examines whether reported asset write-downs mirror market and economic indicators during the sample period. [ABSTRACT FROM AUTHOR]

Analysts of the recent financial crisis often refer to the role of asset ''fire sales'' in depleting the balance sheets of financial institutions and aggravating the fragility of the financial system. The term ''fire sale'' has been around since the nineteenth century to describe firms selling smoke-damaged merchandise at cut-rate prices in the aftermath of a fire. But what are fire sales in broad financial markets with hundreds of participants?? As we suggested in a 1992 paper, a fire sale is essentially a forced sale of an asset at a dislocated price. The asset sale is forced in the sense that the seller cannot pay creditors without selling assets. The price is dislocated because the highest potential bidders are typically involved in a similar activity as the seller, and are therefore themselves indebted and cannot borrow more to buy the asset. Indeed, rather than bidding for the asset, they might be selling similar assets themselves. Assets are then bought by nonspecialists who, knowing that they have less expertise with the assets in question, are only willing to buy at valuations that are much lower. In this paper, we selectively review some of the research on fire sales, emphasizing both concepts and supporting evidence. We begin by describing our 1992 model of fire sales and the related findings in empirical corporate finance. We then show that models of fire sales can account for several related phenomena during the recent financial crisis, including the contraction of the banking system and the failures of arbitrage in financial markets exemplified by historically unprecedented differences in prices of very similar securities. We then link fire sales to macroeconomics by discussing how such dislocations of security prices and the reduction in balance sheets of banks can reduce investment and output. Finally, we consider how the concept of fire sales can help us think about government interventions in financial markets, including the evidently successful Federal Reserve interventions in 2009. Fire sales are surely not the whole story of the financial crisis, but they are a phenomenon that binds together many elements of the crisis. [ABSTRACT FROM AUTHOR]

The Irish property boom of 2003-2008 ended with a spectacular bust leaving the main Irish banks on the point of insolvency. The Irish Government's response was to establish a State-owned bad bank, the National Assets Management Agency (NAMA). The Commission approved the system as compatible with the internal market pursuant to Article 107(3)(b) TFEU and the Communication on Impaired Assets but has required on-going notification of individual asset transfers to assess market value. [ABSTRACT FROM AUTHOR]

Prior research finds that mandatory expensing induces underinvestment in research and development (R&D). The current study investigates whether capitalization can also create R&D investment problems. Abandoning a capitalized project requires asset impairment, a negative reporting effect that could damage managers' reputations. In an experiment utilizing M.B.A. student participants, I find that managers responsible for initiating an R&D project are more likely to overinvest when R&D is capitalized. I show that high self-monitors (those most likely to alter their behaviors to convey a positive image) are most likely to overinvest, suggesting that reputation concerns contribute to this behavior. A follow-up survey reveals that, when R&D is capitalized, experienced executives anticipate overinvestment and expect project abandonment to have a stronger negative impact on the responsible manager's reputation and future prospects at their firm. The results suggest that managers are held responsible for the external reporting consequences of their projects, such that mandating R&D capitalization may not reduce real earnings management. [ABSTRACT FROM AUTHOR]

Bank insolvency has been a significant problem in many parts of the world in the last 30 years. There have been waves of bank failures in developed and developing countries, and also in countries with transitional economies. Between 1997 and 2002, banks had to be closed in more than 50 countries. This paper focuses on one particularly important aspect of the cause of bank insolvency: the relationship between nonperforming loans (NPLs) and bank failure. It will consider both the prevention and control of NPLs and in so doing will examine regulatory and supervisory issues as well as initiatives for dealing with impaired assets. The need for an effective bank insolvency law is a crucial factor which is also addressed. The main aim of the paper is to provide some guidance on a framework for developing and transitional economies, many of which are still suffering severe problems with NPLs.Journal of Banking Regulation (2007) 9, 25–45. doi:10.1057/palgrave.jbr.2350057 [ABSTRACT FROM AUTHOR]

Prior research reveals that write-offs of long-lived assets are both large in magnitude and frequent in occurrence. Responding to calls for enhanced reporting of these items, the FASB issued SFAS No. 121, Accounting for the Impairment of Long- Lived Assets. However, its effect on the characteristics of reported write-offs remains unclear, as implementation requires inherently subjective estimates. Further, critics (including dissenting FASB board members and the SEC) question the standard's guidance. Motivated in part by this debate, this paper contrasts the characteristics of write- offs reported prior versus subsequent to the issuance of SFAS No. 121. Empirical results reveal that economic factors have a weaker association with write-offs reported after SFAS No. 121. This is consistent across macro, industry, and firm-specific variables. Results also indicate a higher association between write-offs and "big bath" reporting behavior after the standard's implementation, and that this "big bath" behavior more likely reflects opportunistic reporting by managers rather than the provision of their private information. These inferences are robust to a number of alternative specifications and variable definitions. Overall, the results suggest the reporting of write-offs under SFAS No. 121 has decreased in quality, consistent with criticisms of the standard. [ABSTRACT FROM AUTHOR]

Discusses the Financial Accounting Standards Board's financial accounting standards (FAS) number 144 entitled, "Accounting for the Impairment or Disposal of Long-Lived Assets". Provisions of FAS number 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which previously provided guidance on determining the amount and timing of an impairment of long-lived assets; Scope and applicability of FAS number 144.

Examines the recent releases of the Financial Accounting Standards Board on asset impairment and share-based payments. Concerns about companies' restructuring and impairment charges; Establishment of accounting standards for the impairment of long-lived assets; Impact of the proposed Statement on the reporting of discontinued operations to all significant components of an entity.

Discusses aspects of the development of the accounting literature on asset impairments in the United States. Financial Accounting Standard Board's attempt to regularize the recording of unrealized losses with Financial Accounting Standards (FAS) 5; Provisions of the FAS 121; Implications of the application of FAS 121 and its potential effect on financial reporting practices.

Discusses the Statement of Financial Accounting Standards No. 121 (SFAS No. 121), the Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, devised by the Financial Accounting Standards Board. Focus of the SFAS No. 121 on long-lived assets and certain identifiable intangible assets to be held and used; Application of the SFAS No. 121 to all business enterprises including not-for-profit entities; Requirement of SFAS No. 121 for an entity to undertake a review for impairment.

Discusses the implications of business restructurings on asset impairment in the U.S. Impairment from the sale or abandonment of business; Accounting for business operations previously reported as discontinued; Accrual of contingencies.