Harmonizing Import Tariff Adjustments with Local Asset Tax Depreciation
Harmonize customs valuation adjustments with local tax depreciation by capitalizing non-refundable duties and unbundled assists into the asset basis via Form 3115.
ASC 360
Meaning
Financial accounting guideline governing the recognition and measurement of impairment losses for long-lived assets. Within the framework of asc 360, companies evaluate whether the carrying amount of an asset is recoverable through future cash flows. This standard applies to property, plant, equipment and identifiable intangible assets.
Asset Recoverability
Testing for impairment occurs whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. Under asc 360, the first step involves comparing the undiscounted future cash flows to the book value of the asset. If the cash flows are lower, the asset is deemed impaired and requires a second step for measurement.
This mechanical test prevents the recognition of losses based on temporary market fluctuations.
Fair Value
Measurement of the loss requires determining the difference between the carrying amount and the fair value of the asset. The company records this difference as a loss on the income statement and reduces the asset value on the balance sheet. This process ensures that financial statements do not overstate the worth of physical or intangible property.
Disclosure Duty
Reporting entities must describe the facts and circumstances leading to the impairment in their notes to the financial statements. The disclosure includes the amount of the loss and the segment of the business affected by the valuation reduction.