Ivey Publishing

Product Details

Measuring Impairment at Dofasco
Product Number:
9B09B017
Publication Date:
01/25/2010
Revised Date:
11/09/2017
Length:
21 pages (6 pages of text)
Product Type:
Case (Library)
Source:
Ivey
In December 2008, the ArcelorMittal Dofasco (Dofasco) accounting team was facing a significant challenge. In the past few years, Dofasco had undergone significant ownership changes, and when the firm had first been acquired the market had placed a premium share value on the Dofasco subsidiary. In light of a recent economic downturn, the accounting team was required to reassess the values assigned to the subsidiary's net assets. Dismal forecasted earnings for the operations indicated a potential impairment of the operation's assets under international financial reporting standards (IFRS). The team began with a review of the original fair value estimates, subsequent purchase price and its allocation to various tangible and intangible assets and liabilities. It was discovered the evaluator's fair value assessments for the various intangibles had relied on an income approach, using projected EBITDA derived from each intangible to determine its value. The team wondered how the revised EBITDA projections would change the recoverable value of Dofasco's intangible assets and therefore discover the implications of the current economic situation on the value of intangible assets recognized at Dofasco's acquisition.
Issues:
Disciplines:
Accounting
Industries:
Manufacturing
Setting:
Canada, Large, 2008
Intended Audience:
Undergraduate/MBA
Price:
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download
Associated Materials
Supplements: 7B09B017 (197 KB)
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