Electroboy Enterprises, Inc. operates several stores throughout northern Belgium and the southern part of the Netherlands. As part of an operational and financial reporting review in a response to a downturn in it markets, the companys management has decided to perform an impairment test on five stores (combined). The five stores sales have declined due to aging facilities and competition from a rival that opened new stores in the same markets. Management has developed the following information concerning the five stores as of the end of fiscal 2015.

Original cost 36 million

Accumulated depreciation 10 million

Estimated remaining useful life 4 years

Estimated expected future annual cash flows (not discounted) 4.0 million per year

Appropriate discount rate 5%

Fair value less cost of disposal 23 million

Principles

Electroboy management would like to know the accounting for the impaired asset in periods subsequent to the impairment.

(a) Suppose conditions improve in its markets. Can the assets be written back up? Briefly discuss the conceptual arguments for this accounting.

(b) Briefly describe how accounting for impairment differs from accounting for revaluation.

(c) Define cash generating units and briefly discuss conceptual arguments for accounting of impaired intangible assets.