See PPE 6.3.1 for information on the interaction between abandonment accounting and the long-lived asset impairment guidance. Determining whether a plan to abandon a ROU asset results in an impairment indicator to a broader asset group will require judgment and will in part be determined by the significance of the ROU asset to the overall asset group. As such, the decision to abandon a ROU asset may be an indicator that an impairment test is required for the asset group. ASC 360-10-35-21 provides indicators of impairment, including a significant adverse change in the extent or manner in which an asset (asset group) is being used. A long-lived asset (asset group) that is held and used should be tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset (asset group) may not be recoverable. Regardless of whether asset groups change, the lessee should consider whether plans to abandon a ROU asset represent an impairment indicator at the asset group level. The Company considered whether the original machines were impaired under the held-and-used impairment guidance of ASC 360-10 and concluded that the overall asset group was recoverable. It had included in its 20X2 capital expenditures budget, which was finalized and approved in June 20X1, an estimated amount to purchase the new machines. Management began re-evaluating the efficiency of the original machines in early 20X1. In a life estate arrangement, there are two parties: the life tenant and the remainderman. Abandonment cannot occur prior to the receipt and installation of the replacement machines, which is expected to occur in December 20X2, at which point the reporting entity will cease use of the original machines. What is a life estate A life estate is an arrangement where one person transfers to another property, reserving for himself the right to use and possess the property for the rest of his life. The original machines were placed in service three years ago and are being depreciated on a straight-line basis over 10 years, with no salvage value expected at the end of 10 years. No proceeds are expected upon abandonment. Manufacturing Co has machines used in its manufacturing process that it plans to abandon when the upgraded replacement machines are delivered and placed in service. Transfers and servicing of financial assets
Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences Business combinations and noncontrolling interestsĮquity method investments and joint ventures
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