Intangible assets impairment test issues: the case of a brazilian telecommunications company

Advances in Scientific and Applied Accounting

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ISSN: 19838611
Editor Chefe: José Alonso Borba
Início Publicação: 30/11/2008
Periodicidade: Quadrimestral
Área de Estudo: Ciências Contábeis

Intangible assets impairment test issues: the case of a brazilian telecommunications company

Ano: 2010 | Volume: 3 | Número: 3
Autores: Paulo Roberto Barbosa Lustosa, Fernanda Fernandes Rodrigues, Rodrigo de Souza Gonçalves, Leonardo Vieira
Autor Correspondente: P. R. B. Lustosa, F. F. Rodrigues, R. S. Gonçalves, L. Vieira | [email protected]

Palavras-chave: intangible assets, impairment, cash flow, residual income.

Resumos Cadastrados

Resumo Inglês:

National and international regulatory agencies by issuing new standards have tried to bring the accounting recorded values near to economic values. Nevertheless, it is understood that the latter carry a deeper level of subjectivity, on the grounds that completely new values will be obtained by the adoption of different conditions. This study aims to perform a comparative analysis between two company valuation methods: the Discounted Cash Flow and the Residual Income Valuation while performing the impairment test. The study case uses the database prepared by a telecommunications company to its subsidiary in the Internet sector for the purpose of the impairment test assessment. Some points have been identified as deserving special attention in a company’s valuation assessment, namely the discount rate and the growth rate. The results show that: 1) a firm’s economic value is sensitive to the use of a sole growth rate to calculate the perpetuity, considering that any changes in the rate will alter the decision based on the test; 2) the setup of a discount rate as a parameter in a firm’s valuation assessment is a fundamental point for the write-off decision resulting from an impairment test.