Long-lived non-financial assets impairment in latvian listed companies

Abstract

Purpose of this research – To explore key aspects to consider in analysing information about impairment of long-lived non-financial assets reflected in financial statements, and to develop recommendations on what kind of issues should be considered in ensuring the accounting concept “true and fair view”.

Design / methodology / approach – The research is based on the analysis of 1) theoretical literature and research papers within the area of evaluation of long-lived non-financial asset impairment; 2) IAS 36; 3) the results of a survey, which in this research work sticks to a questionnaire containing 16 questions. The survey was sent out to all 28 Latvian companies listed on the Baltic Stock Exchange; the number of respondents was 25.

Findings – The main finding of this research paper is the identification of key issues to be considered in the impairment of long-lived non-financial assets to be sure a company’s financial statements reflect the real situation and conservatism of financial reporting has been ensured.

Research limitations / implications – There is a need for further research to find out whether / how the impairment (recognition / reverse) of long-lived non-financial assets influences companies’ financial results and information reflected in financial statements. The research period is from the end of the year 2013 to the year 2015.

Practical implications – The results of this research could be beneficial for academic researchers as well as educators and practitioners of financial statement analysis. The results obtained provide the possibility to identify problems in accounting practice with regard to impairment of long-lived nonfinancial assets and to formulate recommendations for further research.

Originality / value – The research conducted enabled the definition of possible problems in the accounting and reporting process of long-lived non-financial asset impairment in Latvian companies listed on the Baltic Stock Exchange.