ASIC notes the decision by Pental Limited (Pental) to write down the Country Life brand name intangible asset (Country Life brand) by $1.38 million in its financial report for the year ended 30 June 2019.
ASIC had raised concerns on the impairment assessment of the Country Life brand for Pental’s financial report for the year ended 1 July 2018. ASIC questioned the supportability of earnings growth and capital expenditure forecasts used in testing brand names for impairment having regard to historical performance and market conditions.
As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, the impairment of non-financial assets remains a focus area for financial reporting at 30 June 2019.
Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.
Companies should apply appropriate experience and expertise, particularly in more difficult and complex areas of accounting policies and estimates such as impairment of non-financial assets.
