Statement of Financial Accounting Standard (SFAS) 121 is a new standard devoted to the issue of impairment of long-lived assets. Impairment loss occurs when the carrying amount is not expected to be recovered. When SFAS 121 was issued, early adoption was suggested but not required for fiscal years beginning before December 15, 1995. Although there are some similarities, the standard sets some different rules for assets "to be held and used" and assets "to be disposed of" Since the standard does not identify a materiality level, it remains at the discretion of management. This paper first discusses the requirements of SFAS 121. Then a sample of companies is analyzed to determine compliance with the new standard. A sample of25 companies was chosen from the CD-ROM Disclosure Software. The sample was analyzed and compared on a list of items to identify relationship between the items and to identify if, how and when companies plan to comply with SFAS 121. Some of the items noted were year ends, early adoption of SFAS 121, type of impairment, discussion in the management representation letter and discussion in the footnotes to the financial statements.
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