Accounting Assignment/ Professional Essay Writers

1. In connection with the decision to close and sell our plant in Borgofranco, Italy, we recognized an impairment charge of $5 million to reduce the net book value of the plant’s fixed assets to zero. We based our estimate on third-party offers and negotiations to sell the business.
2. We recorded an impairment charge of $65 million to reduce the carrying value of the production equipment at two facilities in Italy to their fair value of $56 million. We determined the fair value of the impaired assets based on the discounted future cash flows of these facilities using a 7% discount rate.
3. We announced that we would cease operations in Falkirk, Scotland. We designated certain production equipment with a nominal carrying value for transfer to our Rogerstone facility.

Don't use plagiarized sources. Get Your Assignment on
Accounting Assignment/ Professional Essay Writers
Just from $13/Page
Order Now

Custom Assignment Help

We reduced the carrying value of the remaining fixed assets to zero, which resulted in an $8 million impairment charge. Complete the first four steps of the seven-step framework for professional decision making introduced in Chapter 4 by answering the following questions:

a. What difficulties will the auditor of Novelis face when deciding whether the impairment charges that Novelis incurred are reasonable?
b. What are the consequences of the auditor’s decisions in evaluating impairments?
c. What are the risks and uncertainties associated with Novelis’s estimation?
d. What types of evidence should the auditor gather to evaluate the reasonableness of management’s estimates? Recall that the framework is as follows. Get Accounting Help Today

Calculate your paper price

Pages(550 words)

Approximate price:-