Learn how to account for long-term assets on the balance sheet through asset impairment.
- In 2014, Microsoft bought the mobile phone division of Nokia, paying about $10 billion. - Essentially, all of this $10 billion was for intangible assets. - [Jim] Nokia brand names, customer relationships and expected operating synergies. - [Kay] Within a year, it was realized that Microsoft had drastically overestimated the value of those Nokia-related intangibles. Those assets were worth $2.5 billion, not 10 billion. - [Jim] Yeah, and the result? A $7.5 billion Nokia intangible asset impairment write-down loss in 2015, just a year after the acquisition. - [Kay] That impairment loss, in Microsoft's income statement, cost the company's operating income to drop 33% compared to the year before. - Hi, I'm Jim Stice. I'm a Professor of Accounting at Brigham Young University. This is my brother, Kay. - I'm also a Professor of Accounting at Brigham Young University. - Come, join us on LinkedIn Learning and we'll show you the accounting for long-term assets, acquisition, depreciation. - And impairment.
- Differentiate types of expenses and costs.
- Identify assets that are goodwill.
- Describe the reason underlying the choice between depreciation methods.
- Determine whether an asset is impaired.
- Describe the revaluation option available using IFRS rules.