 Effects of the asymmetric accounting treatment of tangible and intangible impairments in IAS36: International evidenceNikolaos I. Karampinis and Dimosthenis L. Hevas The Journal of Economic Asymmetries, 2014, vol. 11, issue C, 96-103 Abstract: Using an international sample of 21 countries that follow International Financial Reporting Standards (IFRS), we investigate the association of tangible and intangible asset impairments with future cash flows. International Accounting Standard 36 (IAS36) requires that an asset shall be impaired when its recoverable amount is lower than its carrying amount in financial statements. Future cash flows constitute a core determinant of the estimated recoverable amounts. However, IAS36 treats tangible and specific kinds of intangible assets, such as goodwill, in an asymmetric fashion; while impairment tests for tangible assets shall be performed when relevant indicators exist (such as predictions of decreased future cash flows), specific kinds of intangible assets, such as goodwill, shall be tested on an annual basis. Consistent with our expectations, we find that this asymmetric treatment enhances timeliness of goodwill impairments but decreases their reliability in forecasting future cash flows compared to tangible impairments. Keywords: Accounting asymmetries; Asset impairment; IFRS; IAS36 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:11:y:2014:i:c:p:96-103 DOI: 10.1016/j.jeca.2014.08.001 Access Statistics for this article The Journal of Economic Asymmetries is currently edited by A.G. Malliaris More articles in The Journal of Economic Asymmetries from Elsevier |
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