UNIVERSITY OF IDAHO
M.Acct. Portfolio
Advisor: Jason Porter
Shawn DeSilva
4/29/2013
Table of Contents
Course List ................................................................................................................................................2
Introduction .............................................................................................................................................4
Example 1 – Leadership Analysis .....................................................................................................4

Coach Leadership Analysis Memorandum
Acct. 561
Example 2 – Quality Control Issues ..................................................................................................5

PCAOB Inspection Report Summary
Acct. 590
Example 3 – Variance Analysis ..........................................................................................................6

Case Study: Franklin Health Associates
Acct. 586
Example 4 – Extended Technical Definition .................................................................................6

Assignment #3: Writing to Define
Eng. 317
Example 5 - Revenue Recognition of Multiple Element Arrangements .............................7

Minor Assignment #2: Case Study 12-4: Hemo-Tech Inc.
Acct. 592
Example 6 – Goodwill Impairment Analysis .................................................................................7

Case Study: Enervate Inc.
Acct. 515
Conclusion ................................................................................................................................................7
Appendix ...................................................................................................................................................9
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Course List
Course #
Course Name
Eng. 317 -
Technical Writing
3
n/a
 Proper Use of Technical Formatting in Written Communication
 Understanding of Professional Grammar/Writing Principles
Acct. 440 -
Fraud Examination
3
A
 Knowledge of Various Investigations Regarding Financial Earnings
Management and Corporate Fraud Schemes
 Understanding of Detection Techniques/Preventative Measures
Acct. 497 -
Practicum in Tutoring
1
 Solidified Basic Accounting Concepts and Principles
 Ability to Mentor and Teach a Peer Effectively
A
Acct. 503 -
Work Shop: Accounting Professional Development 1
 Professional Employment Techniques & Resume Building
A
Acct. 503 -
Work Shop: CPA Exam Review
1
n/a
 Extensive Understanding of CPA Exam Topics/Concepts
 Time Management and Commitment to Long-Term Projects
Acct 515 -
Advanced Financial Accounting/Reporting
3
n/a
 Advanced Understanding of Financial Accounting Concepts and
Treatments such as Impairment, Lease Accounting, Derivatives,
Partnerships, Subsidiaries, Revenue Recognition, Etc.
 Ability to Research FASB Standards and Codification System in
order to Interpret Findings and Prescribe a Recommendation
Acct. 530 -
Accounting/Public Sector Entity
3
B
 Advanced Understanding of Auditing Standards/Procedures for
Governmental and Not-For-Profit Entities
 General Understanding of Accounting Principles and Bookkeeping
Used By Governmental and Not-For-Profit Entities
Acct. 561 -
Comparative Accounting Theory
3
A
 Critical Thinking of Various Accounting Theories and Application
 Ability to Effectively Communicate Complex Accounting/Ethical
Issues through Written Communication
 Advanced Understanding of Critical Issues Regarding IFRS
Convergence, History of Accounting/Standard Setters, and
Fundamental Issues Facing the Accounting Profession
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Credits
Grade
Acct. 586 -
Contemporary Management Accounting Issues
3
A
 Effective Oral Communication and Presentation Skills
 Ability to Communicate Realistic Accounting Issues and the
Respective Accounting Treatment to Hypothetical Clients
 Ability to Create and Implement Effective Master Budget and
Professional Reports Regarding Case Analysis’
Acct. 590 -
Advanced Auditing Seminar
3
n/a
 Critical Thinking of Advanced Audit Concepts/Situations such as
Financial Meltdown and Corporate Fraud
 Conceptual Understanding and Application of Substantive and
Analytical Auditing Procedures
 Fundamental Understanding of Auditor’s Role, Importance of
Independence within an Engagement, and High Demand of
Professional Judgment within the Profession
Acct. 592 -
Financial Accounting/Reporting Seminar
3
n/a
 Knowledge of Advanced Accounting Transactions such as
Derivatives, Consolidations, Impairment of Intangible Assets, and
Partnerships.
 Ability to Determine Appropriate Accounting Treatment and
Procedure Based on Realistic Case Studies
Acct. 598 -
Internship
3
A
 Performed Audit Procedures during Engagements of Both Private
and Not-For-Profit Entities.
 Ability to Complete and File Basic Tax Forms such as Form 1040,
Form 1040EZ, Form 990
 Proficient in both ProFX Tax Preparation and Audit Engagement
Software
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M.Acct Portfolio Paper
Introduction
Throughout my time in the Master of Accountancy Program at the University of Idaho, I
have been given the opportunity to learn and develop a number of professional skills that I
will be able to utilize in all my future professional endeavors and aspirations. The three
professional skills that I believe have mastered through the courses I have taken this year
and have offered the most opportunity to improve my ability to function and succeed as a
professional accountant are 1.) Critical Thinking, 2.) Written Communication and 3.)
Accounting Research. I personally believe that these three professional skills are an
essential requirement for any CPA to be successful within the accounting profession and
business world.
The primary professional skill that I believe was the most important fundamental attribute
that was developed throughout the course of the year and offers the most long-term
benefits is the ability to critically think and conceptualize problems facing the accounting
profession. I believe this is the most important skill that I took away from the Master’s
program because this professional skill was tested, reshaped, and was required to be
mastered effectively in order to be successful in essentially every course I had.
The second professional skill I believe I was able to master over the course of academic
year was the ability to communicate through writing. The professional skill of written
communication is a necessity to any professional’s skillset regardless of what role they hold
in a company. If someone is in a management position or even a bottom level employee the
ability to communicate through writing is a required trait of anyone who wishes to be
successful in any profession.
The final professional skill that I have developed and was able to master through the
various academic courses I have taken is the ability to not only research various accounting
principles and codification but also apply those findings to realistic client-based situations.
This professional skill is extremely important to any accounting practioner regardless of
field of study. Whether a professional accountant specializes in tax, audit, or consulting, it
is especially important that the practioner has the ability to research, interpret, and apply
the appropriate accounting treatment to each individual client’s independent situation.
Professional Skill #1: Critical Thinking
To illustrate how I have was able to improve and develop the professional skill of critical
thinking I have chosen two primary examples from my academic course work. The first
example was chosen from Accounting 561, Comparative Accounting Theory, this example
demonstrates my ability to critically dissect complex issues and analyze them at their true
basis. The second example I chose to demonstrate is how I was able to translate my critical
thinking skills from Accounting 590 and apply them to Advanced Auditing Seminar. This
example demonstrates my ability to analyze accounting literature and identify/summarize
the most critical and influential issues.
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Example 1: Leadership Analysis Memorandum
In this specific example, we were asked to compare the leadership styles of Coach Bobby
Knight v. Coach K and how they apply to various leadership theories. Based on our findings
we were then asked to create a recommendation to our manager through a memorandum.
In order to compare the leadership styles of each coach, I first had to determine which
specific leadership styles identified with each coach by analyzing a variety of different
factors such as reputation off the court, success as a coach, ability to lead a community,
primary differences between coaching methods, professional judgment, etc. Based on the
factors I was able to critically evaluate each coach and determine the appropriate
leadership styles accordingly. Before I could match each coach with their respective
leadership style, I first had to critically think about and evaluate each coach’s life and
personally identify with their actions, decision, and judgment. In regards to toning and
developing my critical thinking skills, I believe this example really taught me how to delve
deeper into significant factors and essentially think outside the box in order to find the
appropriate solution. For more information regarding the Leadership Analysis example,
please see Figure 1 of the Appendix.
Example 2: Quality Control Issues – PCAOB Inspection Report
I also chose to demonstrate the development of my critical thinking skills in the Master’s
Program through an assignment given to us in Accounting 590. In this assignment we were
asked to choose a public accounting firm and summarize any significant findings illustrated
by the PCAOB Inspection Report of the respective firm. The specific section I chose to
summarize related to the Quality Control Issues. I believe this section especially
demonstrates my ability to critically think about accounting concepts. Despite the
abundance of quality control issues in this case I was required to use critical thinking to
identify and separate the significant issues that possessed substance from the other less
important issues. The ability to utilize critical thinking skills to separate influential and
significant issues from an abundance of information is a key attribute that is required of all
practioners in order to be successful within the accounting profession. For more
information regarding the Inspection Report Summary example, please see Figure 2 of the
Appendix.
Professional Skill #2: Written Communication
To describe how I was able utilize the academic course work offered through the Master’s
Program to build my written communication skills, I have chosen two examples from
assignments I have completed over the course of the year. The first example I chose to
illustrate my writing ability is an assignment from Accounting 586, Contemporary
Management Accounting Issues. For this assignment we were asked to generate a cost
analysis regarding various product lines and based on this analysis develop a
recommendation in regards to the specific accounting treatment. We were also required to
explain these findings in a manner that our fictitious client could clearly understand. For
the second example, I chose a passage from an assignment I completed for English 317,
Technical Writing, because it demonstrate how I was able to grasp the most technical and
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professional writing techniques/formats and implement them within my writing projects.
Regardless of whether you are Managing Partner or Accounting Intern, being able to
properly use professional writing techniques and principles such as proper salutation,
formatting of various business documents, and technical/grammatical competence is a
required qualification for any accounting professional.
Example 3: Variance Analysis Case Study
The first example that I believe was able to hone my writing ability the most and had the
greatest impact on my written communication skills was an assignment that asked to
create analysis of variances amongst various product lines in order to prescribe a
recommendation to a fictitious client. This assignment helped improve my written
communication skills immensely by teaching me how to translate complex accounting
jargon into an understandable language that clients can easily comprehend and grasp. This
is very important to the success of being a future accountant because whether it is
bookkeeping, auditing, tax, or consulting, accounting is a service profession. If a client is
unable to understand our findings or misinterprets our recommendation then they will be
unhappy with the service we have provided them and will eventually take their business
elsewhere to another firm that can better satisfy their service needs. For more information
regarding the Variance Analysis example, please see Figure 3 of the Appendix.
Example 4: Extended Technical Definition
For the second example of how I was able to improve my writing skills through various
coursework, I have chosen an assignment that requires communicating an extended
technical definition of a complex term that applies to our field of study to a non-technical
audience. For the complex term that applies to my field of study, I chose the term ‘audit
engagement’ to write my extended technical definition for a non-technical audience, which
is an audience that has no prior knowledge or understanding of the term being defined.
This example demonstrates how I was able to improve my writing ability by learning how
to take a complex and technical concept and break it down to its most basic components, by
doing this I learned how to clearly translate the concept through writing in clear manner to
an audience with no previous understanding. This professional skill is also a fundamental
tool in a practioner’s skillset because it allows CPA’s to explain complex tax treatments or
advanced accounting principles to clients who lack the understanding required to be
knowledgeable with such issues. For more information regarding the Extended Technical
Definition example, please see Figure 4 of the Appendix.
Professional Skill #3: Accounting Research
The third professional skill that I believe I have been able to develop and have seen
significant improvement throughout this year is the ability to effectively research through
accounting standards and literature. Because the accounting profession is always evolving
and monumental changes are being made on a consistent and frequent basis, it is very
important that accounting practioners possess the means of keeping up with all new
updates and exposure drafts that are continuously being released by the accounting
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standard-setters. The first example I chose to demonstrate how I was able to improve my
ability to research accounting concepts and issues effectively was a Case Study assigned in
Accounting 592, Financial Accounting and Reporting Seminar, regarding the specific
accounting treatment of the revenue recognition for multiple-element arrangement based
on the standards found in FASB’s Accounting Standard’s Codification database. The second
example I chose to represent the improvement of my ability to research was a Case Study
from Accounting 515, Advanced Financial Accounting and Reporting, that required using
accounting research to find the treatment of potential impairments on goodwill for three
separate subsidiaries. Both of these examples illustrate how I was able to utilize
accounting research to effectively locate, interpret, and apply the appropriate accounting
treatment for two separate accounting issues.
Example 5: Revenue Recognition of Multiple Element Arrangements Case Study
The example of the assignment that had the most influence on my ability to research
accounting articles and standards was the case study that required determining the specific
accounting treatment for the recognition of revenue for a multiple element arrangement
under US GAAP using the Accounting Standards Codification system. Although this was not
my first time using the ASC database, this assignment did demonstrate that if used
correctly the ASC database can be an extremely effective tool to quickly and efficiently find
the appropriate treatment for an accounting problem or issue. This type of professional
skill may not be used as frequently by accounting professionals as critical thinking or
written communication but it does serve a vital purpose for professionals by saving them
valuable time. In the accounting profession time is money, when it comes to a tax, audit, or
any other accounting-related dilemma it pays to be able to streamline the process by using
the ASC database to find the appropriate solution.
Example 6: Goodwill Impairment Analysis Case Study
The final example I chose to demonstrate the mastering of my professional skills,
specifically the ability to effectively utilize accounting research, is a case study regarding an
analysis of the potential impairments on goodwill using the ASC database to determine the
appropriate accounting treatment under US GAAP. In order to determine the exact value of
impairment for the goodwill of each subsidiary, I first had to identify the appropriate
accounting standard to apply to the given situation in order to ensure that the final outputs
of my excel worksheet were accurate and reliable. By using the ASC system, I was able to
improve my ability to locate specific accounting treatments as well as my ability to apply
the respective treatment to a given situation and determine the correct accounting values
under US GAAP. Being able to interpret and apply US GAAP according to ASC standards is
as important to an accounting professional as being able to simply use and locate the
standards using the codification database. This is a vital skill for an accounting professional
to possess, because if an accountant is only able to locate the appropriate GAAP but is
unable to interpret the application correctly then the ability to provide a reliable and
professional service to the client significantly diminishes.
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Conclusion
In conclusion, although I believe I have attained a number of professional skills through my
time here at the University of Idaho, the three primary professional skills that I believe I
have mastered through the Master of Accountancy Program are 1.) Critical Thinking, 2.)
Written Communication, and 3.) Accounting Research. Through these professional skillsets
I will be able to increase my chances of being successful within my career as a fully
functional accounting professional. Critical Thinking is a fundamental attribute to the
success of any accounting practioner, it is a skill that is literally required to be used in
almost any situation a professional will face. Considering the amount of writing the
accounting profession requires, being able to communicate complex transactions, tax
treatments, or other accounting issues to clients or management is an extremely beneficial
and useful asset for future accountants to possess. If I continue to effectively use
accounting research I will be able to solve complicated accounting predicaments by directly
locating the appropriate solution quickly and efficiently. By continuing to utilize and build
on these professional skills, I believe I will be able to not only accomplish my professional
goals but also continue to grow as an accounting profession.
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Appendix
Figure 1: Coach Leadership Analysis Memorandum – Acct. 561
After extensive research on the career of Coach Krzyzeweski, commonly known as Coach K, we
immediately identified him with the ethical leadership theory. Some of the primary characteristics that
indicated him as an ethical leader were that he was not just a phenomenal leader on the court; he was
also able to capture the hearts and spirits of the entire university and community around him. An
important factor of being an ethical leader is not only making ethical decisions but promoting ethical
behavior in those around you. By leading by example, Coach K was able to extend his leadership and
ethical behavior to areas outside the court, i.e. classrooms, boardrooms, conferences, even acted as a
personal advisor to the University’s President. One of the primary contributors to Coach K’s success as
leader is that he possesses “emotional intelligence,” which is the ability to manage oneself and their
relationships effectively through the use of self-awareness, self-management, social awareness, and
social skills. Because of his emotional intelligence, Coach K is fully aware of his role as a leader and
acknowledges his responsibility to not only hold himself accountable for his actions but for the actions
of his team as well. Coach K has stated, “I don’t want to be a manager or a dictator. I want to be a
leader – and leadership is ongoing, adjustable, flexible, and dynamic.” (Snook 2005a, p. 3) Truly
effective leaders are able to “switch amongst leadership styles as conditions dictate to create the best
organizational climate and optimize business performance.” (Goleman 2000, p. 2) Although my team
and I determined that Coach K does utilize numerous leadership styles, the style we thought he used
the most was an “affinitive leadership style” which requires creating harmony and building emotional
bonds with the people around you. The relationships Coach K created on and off the court were built
with love, trust and an unspoken mutual respect for one another. He instilled a feeling of a family
bond amongst not only the players he coached but also within the community he lived. My team and I
believe a perfect example of this family bond was captured in a conversation shared between Coach K
and his wife at the time of their third daughter being born. Mrs. Micki Krzyzeweski asked her husband
if he had been disappointed upon receiving his third baby girl opposed to his first son, and his
response was simple, “No, I already have 15 sons.” (Snook 2005a, p.8)
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Figure 2: PCAOB Inspection Report Summary – Acct. 590
Quality Control Issues
In addition to the Board’s three deficiencies they found within the Firm’s audit work, they were also
able to identify several issues related to their quality control system. One of the primary issues that
the Board identified as a significant issue facing their quality control system was the lack of “technical
competence, due care, and professional skepticism.” This issue is related to the Firm’s inability to
delve deeper into their audit engagements and truly assess managements reasoning behind the
number they report on their financial statements. If the Firm’s audit partner’s used more technical
competence, due care, and professional skepticism within their engagements, then they could prevent
these deficiencies from reoccurring in the future.
The other problem the Board identified as a significant quality control issue was the Firm’s “concurring
partner review,” which is the procedure of having a another partner reviewed by a professional
competent reviewer. According to the inspection team, they have found no evidence that the current
procedure used by the Firm‘s concurring partner review has resulted in any identification of any of the
deficiencies found by the Board’s inspection team. Essentially, the Board suggests that implementing
a more extensive concurring partner review by increasing the level of due care and professional
skepticism within their audit work and engagements they will decrease the amount of deficiencies and
quality control issues as well.
Overall, based on the Board’s inspection of the Firm’s audit work and quality control system they have
come to the conclusion that “the Board has concerns that Firm’s system of quality control fails to
provide such reasonable assurance” that is required by professional standards. It is also important to
remember that although the Board recognizes these significant deficiencies within the Firm’s audit
work and quality control system, these deficiencies are in no way any indication that any failure in the
Firm’s audit procedure lead to an “insufficiently supported audit opinion.” Which means although the
PCAOB found a number of deficiencies within the Firm, it does not necessarily mean those deficiencies
lead to a false unqualified opinion within any of their audit engagements.
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Figure 3: Variance Analysis - Case Study: Franklin Health Associates – Acct. 586
Dear Mr. Barber:
As you have requested, my team and I have generated a cost analysis regarding the
four different lines of pens your company produces. For our cost analysis, my team and I
chose to use an activity based costing system in order to accurately allocate overhead
amongst the four separate lines of pens, this costing method will give us a more realistic
presentation of how each pen line individually affects your company’s bottom line.
Before we could truly analyze each pen color, we first had to determine which
operating activities to allocate overhead amongst. Under Appendix A, you can see that the
four primary activities we chose to use were Machine Hours, Productions Runs, Setup Time,
and Parts Administration, after determining each activity we then allocated all overhead
expenses accordingly. Using the drivers given by your company, we were then able to
calculate the applied overhead cost per driver for each of the activities. By applying the
overhead rate to each activity we were able to determine the approximate amount of
overhead to allocate to each pen. Finally after determining the amount of overhead to
allocate to each line we were able to create an Income Statement, displayed in Appendix B, to
truly compare the amount of return each color of pen was individually producing. Due to
rounding error, some of the values below are slightly off, but regardless they are still able to
give us the necessary information to make a solid recommendation.
After thorough analysis, we were able to gather enough conclusive data to make a
reliable recommendation to you and the other members of the Board of Directors. Based on
the cost analysis of each line of your pens, my team and I have recommended that Classic Pen
Company should discontinue the Red and Purple lines of pens you are producing. As you can
see in our Appendices’, both the Red line and Purple line possess a negative return on sales
and cost significantly more to produce than your Black and Blue lines of pens. The Purple and
Red lines are negatively impacting your bottom line and it is in your company’s best interest
to terminate their production immediately.
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Figure 4: Extended Technical Definition - Writing to Define – Eng. 317
What is an Audit Engagement?
An audit engagement is essentially a very complex and extensive review of all financial
statements of public companies, public meaning they are traded on the stock market, as
required by the Federal Government’s Sarbanes Oxley Act of 2002. Because audit
engagements are a federal requirement for all public companies and is in fact their
responsibility to make sure an audit is conducted on their financials, audit engagements are
one of the primary services offered through accounting firms in order to find new clients and
retain existing ones. The ‘engagement’ portion of the term audit engagement primarily refers
to the mutual agreement that must be legally established between the principal, the public
company, and the agent, the auditing firm, prior to conducting any audit procedures. Both
the principal and the agent must agree on the responsibilities of both parties during the audit
engagement, the timeliness of the engagement (how long it will last), and the total cost of the
audit to the principal. At any point during the audit engagement, if either the agent or
principal does not meet the agreed upon terms of the ‘engagement’ or agreement, then
depending on the situation and reason of disagreement each party is granted the ability to
withdraw from that engagement and seek out an alternative solution through litigation or
other legal means.
How is an Audit Engagement Conducted?
The first initial step in beginning any audit engagement starts with a meeting with a public
client in order to discuss the terms of the engagement such as responsibilities, timing, costs,
and the extent at which their company must be audited based on their respective level of risk.
An auditor will assess the level of risk of a public company based on the likelihood of that
company becoming insolvent, or essentially bankrupt. The more debt a company uses to
leverage themselves the higher the level of risk they will be associated with, for a company
that has no debt their level of risk would be very low and would not require as extensive of an
audit as a company with a significant amount of debt and a high risk rating. It is very
important to establish the extent of an audit prior to actually conducting it because the higher
level of risk means a more extensive audit which means a higher cost to conduct the audit
resulting in a higher charge to the public company at the end of the engagement. After all
terms of the engagement are agreed upon and both parties have signed the necessary
documents, a team of auditors will actually travel to the company being audited and being
conducting the necessary audit procedures. These types of procedures are not limited to
bank confirmations, physical inventory counts, management inquiry, statistical analysis of
various transactions, and even recalculation of the financial statements. After the auditing
team has conducted all the necessary procedures and finished testing the financials, based on
their results they will make an opinion on the integrity of the financials stating that they are
“presented fairly in all material aspects.” Each opinion vouches for the integrity of a
company’s financials, and is what allows investors to trust what is being presented by the
company in order to make the best investment decisions for themselves and the economy.
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Figure 5: Revenue Recognition of Multiple Element Arrangements – Acct. 592
Based on ASC 605-25-30-2, Hemo-Tech needs to apply the relative selling price method to
each of the three deliverables in order to be in compliance with the code. Under the relative
selling price method, Hemo-Tech will determine their selling price of their deliverable using
the Vendor-Specific Objective Evidence ( if it exists), if not available, Hemo-Tech must use
Third-Party Evidence to determine the selling price of the deliverable. If neither venderspecific objective evidence or third-party evidence exist then Hemo-Tech will use the Best
Estimate of Selling Price to determine the selling price of that deliverable.
Deliverable 1: Equipment
For the first deliverable of Equipment, I believe Hemo-Tech should utilize the ‘Best Estimate
of Selling Price’ in order to determine the correct selling price of the equipment. Because
Hemo-Tech does not know the price of their equipment they cannot use VSOE, and because
neither of their competitors sell to similar equipment to similar customers they cannot use
TPE either. Based on ASC 605-25-30-6C, because there are other competitors out there
selling similar models Hemo-Tech must make sure that their selling price is consistent with
their competitors. Also, because Hemo-Tech has the capability to accurately assess their
costs of manufacturing, materials, labor, R&D, and also have access to past data regarding
their competitor pricing and markups, Hemo-tech can make a fairly reliable estimate
regarding equipment’s selling price based on its standalone basis. The values required to
calculate what the standalone basis of the equipment is can be determined by assessing the
costs of manufacturing and competitor markups.
Deliverable 2: Discount on Future Supplies
For the second deliverable, Discount on Future Supplies, I believe Hemo-Tech should utilize
the ‘Vendor Specific Objective Evidence’ to determine the correct selling price of the
deliverable. Based on ASC 605-25-30-6A, “Vendor-specific objective evidence of selling price
is limited to… the price charged for a deliverable when it is sold separately.” Since HemoTech sells the supplies separately for $3,000 per box, this is the selling price at which they
must report the discount on future supplies deliverable at, as required by ASC 605-25-30-6A.
Deliverable 3: Screen and Report Services
For the third deliverable, Screen and Reported Services, I believe Hemo-Tech should utilize
‘Third Party Evidence’ to determine the correct selling price for this deliverable. Because
Hemo-Tech cannot determine a price if they deliverable was sold separately they cannot use
VSOE. Based on ASC 605-25-30-6B, “selling price is the price of the vendor’s or competitor’s
largely interchangeable products or service in standalone sales to similarly situated
customers.” Because Hemo-Tech has “two close competitors that provide similar service to
similar customers” that can also interchangeably provide the same screen and report services
for Hemo-Tech’s equipment, Hemo-Tech must report the selling price of this deliverable
based on Third Party Evidence provided by their competitors. In order to meet the
requirements of ASC 605-25-30-6B, Hemo-Tech must estimate its selling price of the
deliverable based on the standalone basis of what their competitors sell their similar products
to similar customers. Both Competitor X and Competitor Y provide services to Hemo-Tech’s
equipment based on the standalone value, Hemo-Tech can use this information to determine
the selling price of their Screen and Report Services.
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Figure 6: Goodwill Impairment Analysis – Case Study – Acct. 515
Appendix 3: ASC 350-20-35-(4-8)
MacroMedia
Accounts
Inventory
Customer List
Land
Copyrights
Trademark
Equipment (net)
Goodwill
Liabilities
Carrying Value
Fair Value
$3,503,540
$3,502,140
$287,435
$267,435
$20,652
$20,652
$247,562
$247,526
$10,260
$1,750
$3,289,550
$3,289,050
$19,500
($2,356,050) ($2,396,050)
$5,022,449
$4,932,503
$5,022,449
$4,919,250
$103,199 *Move to Step 2
Step 1:
Carrying Value
Est. Fair Value
FV IS < CV
Step 2:
Est. Fair Value
$4,919,250
FV of Net Id. Assets
$4,932,503
Write off ALL of GW
($13,253)
Loss on Impairment of GW
$19,500
Goodwill
Note: To record loss on impairment of Subsidiary: Stepwise.
Date
$19,500
GymDVD
Accounts
Inventory
Customer List
Land
Copyrights
Trademark
Equipment (net)
Goodwill
Liabilities
Step 1:
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Carrying Value
Est. Fair Value
FV IS NOT < CV
Carrying Value
Fair Value
$589,640
$579,400
$648,902
$639,801
$205,890
$236,540
$14,520
$6,654
$19,720
$17,500
$150,350
$146,258
$8,621
($228,546)
($228,546)
$1,409,097
$1,397,607
$1,409,097
$1,410,310
($1,213) *NO IMPAIRMENT EXISTS