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An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136

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  • Steven Cahan
  • David Bond
  • Brett Govendir
  • Peter Wells
  • Steven Cahan

Abstract

type="main" xml:id="acfi12194-abs-0001"> 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.

Suggested Citation

  • Steven Cahan & David Bond & Brett Govendir & Peter Wells & Steven Cahan, 2016. "An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 259-288, March.
    • Handle: RePEc:bla:acctfi:v:56:y:2016:i:1:p:259-288
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    File URL: http://hdl.handle.net/10.1111/acfi.2016.56.issue-1
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    Cited by:

    1. Tadeusz Dudycz & Jadwiga Praźników, 2020. "Does the Mark-to-Model Fair Value Measure Make Assets Impairment Noisy?: A Literature Review," Sustainability, MDPI, vol. 12(4), pages 1-24, February.
    2. Chen, Vincent Y.S. & Keung, Edmund C. & Lin, I-Min, 2019. "Disclosure of fair value measurement in goodwill impairment test and audit fees," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(3).
    3. Benjamin T. Albersmann & Reiner Quick, 2020. "The Impact of Audit Quality Indicators on the Timeliness of Goodwill Impairments: Evidence from the German Setting," Abacus, Accounting Foundation, University of Sydney, vol. 56(1), pages 66-103, March.
    4. Kabir, Humayun & Su, Li & Rahman, Asheq, 2020. "Firm life cycle and the disclosure of estimates and judgments in goodwill impairment tests: Evidence from Australia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(3).
    5. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.
    6. Durocher, Sylvain & Georgiou, Omiros, 2022. "Framing accounting for goodwill: Intractable controversies between users and standard setters," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 89(C).
    7. d'Arcy, Anne & Tarca, Ann, 2018. "Reviewing IFRS Goodwill Accounting Research: Implementation Effects and Cross-Country Differences," The International Journal of Accounting, Elsevier, vol. 53(3), pages 203-226.

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