In December 2008, the ArcelorMittal Dofasco (Dofasco) Accounting team with a great challenge. In recent years, Dofasco participation ratio changes, and if the company had been acquired, the market for the first time placed a premium on the share value Dofasco subsidiary. Given the recent economic downturn, the accounting team was required to reconsider the values ​​assigned to the net assets of the subsidiary. Gloomy forecast earnings for the operations indicated a piece … Read more »

In December 2008, the ArcelorMittal Dofasco (Dofasco) Accounting team with a great challenge. In recent years, Dofasco participation ratio changes, and if the company had been acquired, the market for the first time placed a premium on the share value Dofasco subsidiary. Given the recent economic downturn, the accounting team was required to reconsider the values ​​assigned to the net assets of the subsidiary. Gloomy forecast earnings for the operations indicated a possible impairment of the operation of the assets in accordance with International Financial Reporting Standards (IFRS). The team began with a review of the original estimates of fair value and their subsequent purchase price allocation to various tangible and intangible assets and liabilities. It was discovered, the evaluator fair value estimates for the various intangible had left an income approach, derived with projected EBITDA of each intangible, to determine its value. Asked the team how the revised EBITDA projections would change the impairment of intangible assets Dofasco and thus to discover the effects of the current economic situation on the value of intangible assets recognized at Dofasco takeover.
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Mary Jane Mastrandrea
Source: Ivey Publishing
21 pages.
Publication Date: Jan 11, 2010. Prod #: 909B17-PDF-ENG
Measure impairment at Dofasco HBR case solution