More writedowns from “Grand Theft Aero”. What’s the entry if the airplanes are insured? What if it is not probable that the insurance will cover the loss?
Why do you think these particular impairments will be hard to estimate? What are some of the factors that go into the calculation?
Should Exxon have already written down (booked an impairment) on its fixed assets? What argument does the firm use to justify not writing them down (at least yet)?
What’s the entry for the $262,000,000,000? Are you surprised that such magnitude was booked for first half of 2020? (PS: Do we impair liabilities? Equity?)
What kind of accounting issues do you expect at ULTA (across all 3 main statements), given its review of its stores in the covid era?
Is a goodwill impairment a leading indicator, or lagging? Why do you think impairments are on the rise?
So, the oil firms have fewer goodwill impairments due to rebounding oil prices. Are they allowed to reverse any of these impairments? Should they be allowed to do so? Why or why not?
GM’s Venezuelan operations were expropriated by the Venezuelan government. What sort of disclosures will GM make? What remeasurements will also likely be necessary as a result? What’s the journal entry?
So Staples’ results were impacted by goodwill impairment and restructuring charges. What are the economic implications of these accounting charges? What are the recognition criteria for these accounting charges?
How can a write-down on oil reserves be beneficial to Exxon’s executives (i.e., “bail them out”)? How would you determine if a probe into accounting practice were “politically motivated”?
Can you connect the dots between exchange rates and goodwill impairments? Are the effects related to FX transactions or translations?
Exxon has been criticized (and investigated) for not writing down the value of its oil reserves. Two different models for writing down these reserves are mentioned in the article. Why are there different models? Should there be?
Do you think you could have predicted the goodwill impairments for these German firms? What would make good predictors?
What accounting measurement and reporting issues are particularly applicable to firms with fewer fixed assets?
Exxon has not impaired certain oil and gas-related assets, even though the price of oil has fallen. What are the two main criteria for recognizing an impairment of these assets? Do you believe both criteria have been met? How could the district attorney litigate against an accounting issue that is so judgment-dependent?
How is a “bad” M&A deal reflected in accounting measures? Do you think firms do pay more for a target in anticipation of being able to carry out the integration efficiently and effectively?
Can you write down in simple equation form how goodwill impairments are currently measured and how they are proposed as being measured (step 2 of the impairment test)? Can you articulate how the proposed test will make it much easier for firms?
Do you think the proposed goodwill impairment test will result in major changes in the magnitude of goodwill impairment charges? Will it matter to the capital markets if this proposal is passed?
What are some of the collateral effects on companies with write-downs? Were these write-downs surprising? Why or why not? What are some of the valuation issues with respect to measuring the impairments?f
