A finished ACC-660 Topic 1 dual-framework impairment comparison example, testing one asset group under ASC 360 and IAS 36 and showing how a small forecast change moves one result sharply. Searches like "acc 660 topic 1 assignment example", "acc660 topic 1 sample" and "acc-660 topic 1 example" land here.
What a finished ACC-660 Topic 1 dual-framework impairment comparison looks like
The finished comparison works one set of facts twice, every figure illustrative. A packaging line forming a single asset group carries $5,000,000 and is expected to produce net cash flows of $900,000 a year for six more years; its fair value is $4,000,000, less $100,000 of disposal costs. Under ASC 360 the first step asks only whether undiscounted flows of $5,400,000 recover the carrying amount, and they do, so no loss is recognized. IAS 36 compares the carrying amount with recoverable amount, the higher of fair value less costs of disposal, $3,900,000, and value in use, the same flows discounted at 8 percent, $4,160,592. The IFRS loss is $839,408. A second forecast of $820,000 a year then moves the GAAP loss from nothing to $1,000,000 and the IFRS loss to $1,100,000.
How an ACC-660 Topic 1 example is structured
Three columns carry the comparison: the facts, the GAAP result and the IFRS result. It opens by defining the asset group and the cash-generating unit and showing that on these facts they contain the same assets, so any later difference comes from the tests themselves. The cash flow forecast follows with its source, the plant's approved budget, and the discount rate with its basis. A third part runs the ASC 360 recoverability step and then stops, because a passed recoverability test ends the GAAP analysis. The IAS 36 computation comes fourth, with both measures of recoverable amount shown and the higher one used. A fifth part reruns both frameworks on the lower forecast, which exposes the cliff built into an undiscounted test. The sixth part sets out what each framework does if the forecast later recovers, and the comparison ends with the disclosure a reader would need under each.
Same assets under both frameworks
The asset group and the cash-generating unit are shown to contain identical assets, which removes the unit of account as an explanation for the gap between results.
Undiscounted flows end the GAAP test
Because $5,400,000 of undiscounted flows exceeds the $5,000,000 carrying amount, ASC 360 recognizes nothing, even though the discounted value of those same flows is lower.
Recoverable amount taken from the higher measure
IAS 36 sets value in use of $4,160,592 against fair value less costs of disposal of $3,900,000 and measures the loss from the larger of the two.
A lower forecast exposes the cliff
Cutting expected flows by $80,000 a year moves the GAAP loss from zero to $1,000,000 at once, while the IFRS loss rises by only $260,592.
Reversal treated differently in later years
IFRS reverses the loss if estimates improve, capped at the carrying amount the asset would otherwise have had, while US GAAP forbids reversal for assets held and used.
Where marks go in ACC-660 Topic 1
The weakest comparisons describe the two impairment models side by side and never run either one on the facts. A comparison that states the GAAP test uses undiscounted flows, without setting $5,400,000 against $5,000,000, recites the standard and leaves the point unshown. Measuring the GAAP loss against value in use, or the IFRS loss against undiscounted flows, mixes the frameworks, and many sections mark that as an error rather than a simplification. Writers who pick one forecast and report one number miss what the topic is asking, since the sensitivity is the finding. Calling the GAAP result more conservative misreads the cliff, which cuts in either direction depending on where the forecast sits. A paper silent on reversal leaves out the difference that shapes depreciation and income in each later year.
Get an ACC-660 Topic 1 example written to your instructions
Send the ACC-660 Topic 1 instructions, the rubric your classroom posts and the asset or cash flow facts your section assigned. We write a custom example to them, with each framework run on the same facts, both recoverable measures computed, the forecast tested for sensitivity and reversal addressed, back in 24 to 48 hours. The first one is free.
ACC-660 Topic 1 questions, answered
Why does US GAAP use undiscounted cash flows in the first step?
The recoverability step asks a narrow question: will the asset group's carrying amount come back at all through use and eventual disposal. Undiscounted flows answer that question and nothing else, and only a failed test leads to measuring the loss at fair value. The effect is fewer recognized losses and a sharp threshold between none and a large one, which the example exposes with its second forecast.
Can an impairment loss be reversed?
Under IFRS, yes, for assets other than goodwill: if the estimates behind recoverable amount improve, the loss is reversed, capped at the carrying amount the asset would have had with no impairment. Under US GAAP, a loss on an asset held and used establishes a new cost basis and cannot be reversed. Coursework comparisons often turn on this point, because it changes depreciation and income for years.
Which discount rate does value in use require?
IAS 36 calls for a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the asset that the cash flow estimates have not already absorbed. Cases usually supply one. The example states its 8 percent rate and the basis for it in one line, because a rate chosen without support can move value in use as much as the forecast does.