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Extracts from the 2017 Myer Limited annual report and two relevant articles are attached below.
(i) Using the Consolidated Balance Sheet and Notes to the Consolidated Financial Statements answer the following questions. In the financial year ended 29 July 2017:

  • What proportion of total assets are intangible assets?
  • What are the components of intangible assets?
  • What does Myer discuss about impairment of these intangible assets?

(ii) What does the article from The Australian discuss about probable impairment of intangible assets?
(iii) Reading the ASIC media release, what is the main message of the ASIC statement?
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QUESTION 1 Extracts from the 2017 Myer Limited annual report and two relevant articles are attached below. (i) Using the Consolidated Balance Sheet and Notes to the Consolidated Financial Statements answer the following questions. In the financial year ended 29 July 2017: What proportion of total assets are intangible assets? What are the components of intangible assets? What does Myer discuss about impairment of these intangible assets? (ii) What does the article from The Australian discuss about probable impairment of intangible assets? (iii) Reading the ASIC media release, what is the main message of the ASIC statement? Myer writedowns on the cards as intangible assets beat market cap The Australian, February 12, 2018, Scott Murdoch and Bridget Carter Myer risks breaching lending covenants if it follows the lead of David Jones and slashes the value of intangible assets following a sharp fall in earnings. According to Macquarie Equities, Myer is at risk of breaching covenants if earnings before interest, tax, depreciation and amortisation fall by one-third, or if Myer cuts the value of intangibles on its balance sheet by two-thirds. Under existing covenants, Myer must maintain shareholder equity of at least $500 million. Equity at last balance date was $1.07 billion, underpinned by $986 million of intangible assets. If Myer wrote down intangibles including goodwill (which is in the books at $465 million) and brand names ($422 million) by $600 million it would breach the $500 million shareholder equity covenant. 18-087MR Myer writes down intangible assets Wednesday 28 March 2018 ASIC notes the decision by Myer Limited (Myer) on 21 March 2018 to write down the value of its goodwill and brand name intangible assets by $515 million in its financial…

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