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Re-valuation of a non-current asset

Bryan Frey's Profile

I have not been in a company with large, hard assets for many years but I understand there are some recent changes in standards for establishing and maintaining book value. We have some long-term hard assets we need to establish book values for. What is the current process for valuation and what are the attendant accounting entries? Where may I find the latest guidance and Q&A on the subject? Thank you.

Answers

Scott Lane
Title: CFO and CRO
Company: TPG Credit Management
(CFO and CRO, TPG Credit Management) |

What kind of company does this relate to? If not an investment company then this is likely an asset class not carried at fair value, it would be depreciated cost.

For long-lived assets (i.e., property, plant, equipment) the basic accounting treatment is fairly unchanged: book cost then depreciate that cost over the estimated useful life of the asset.

The difficult aspect here is that you need to periodically review long-lived assets for impairment (at least annually I believe). This is where the fair value concept comes in, you wind up in sort of a lower of cost or market approach.

The relevant GAAP was FAS 144 (see link below). The technical reference has changed but the GAAP requirement should still be the same.

http://www.fasb.org/pdf/aop_FAS144.pdf

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