August 15, 2013 – 16 per cent of the ASX 300 companies reviewed in RSM Bird Cameron’s Business Acquisition and Impairment Review 2013 recorded impairment losses (the amount by which the carrying amount of an asset exceeds its recoverable amount*), resulting in a total write down of $2.077 billion in the 2012 financial year.
This is an increase of 11 per cent compared with the 2011 financial year, in which 5 per cent of companies recorded impairment losses, resulting in a total write down of $1.083 billion.
21 per cent of the non-ASX 300 companies reviewed recorded impairment losses, resulting in a total write down of $73.4 million in the 2012 financial year. This is a 10 per cent increase on 2011, when 11 per cent of companies recorded impairment losses, resulting in a total write down of $131.5 million.
Glyn Yates, director of corporate finance, RSM Bird Cameron, said, “Certain triggering events result in a requirement for assets to be tested for impairment. In addition, assets such as goodwill are subject to mandatory impairment testing at least annually, irrespective of whether there is any indication of impairment.
“Impairment charges continue to be recognised in relation to acquired intangible assets. This is because listed entities have continued to struggle to justify asset values purchased at historically high price levels prior to the GFC.
“Companies are having to reassess future business plans and profitability forecasts in light of the continued economic uncertainty and recognise impairment charges accordingly. Impairment charges can have a significant impact on an entity’s reported results and net asset position.”
RSM Bird Cameron’s Business Acquisition and Impairment Review 2013 analyses the financial statements of a diverse cross-section of Australian listed companies to assess the financial reporting impact of acquisitions made by these companies.
Segmented into ASX 300 and non-ASX 300 entities, the report offers insight into the differing acquisition and accounting strategies of large, medium and small companies.
RSM Bird Cameron’s Business Acquisition and Impairment Review 2013 also analyses:
* acquisitions in 2011 and 2012
* the structuring of deals (cash, equity or earn-out)
* intangibles (goodwill, brands, trademarks, patents, customer contracts and software) as a percentage of total consideration
* purchase price allocation and amortisation
* discount rates used for impairment testing.
About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the seventh largest network of independent accounting and consulting firms in the world.