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The SEC staff’s comments around fixed assets primarily related to the accounting for impairments, including the assessment of whether an impairment analysis was necessary. The SEC staff has focused on the quality of the disclosure of the judgments and estimates involved, frequently commenting on:
  • at risk assets or asset groups, including the level of uncertainty and sensitivity of key assumptions;
  • the qualitative and quantitative factors that support impairment test conclusions, including the timing of when the impairment was recognized; and
  • whether economic and market conditions and operating losses at the segment level should have triggered an interim impairment analysis.
Comment Examples
Guidance references
  • Expand your disclosure to discuss the degree of uncertainty associated with the key assumptions used in evaluating asset recoverability and identify potential events and/or changes in circumstances which would reasonably be expected to negatively affect these key assumptions.
  • Describe for us, in reasonable detail, the material facts, circumstances and assumptions you considered in determining the amount and timing of the impairment charge recorded in the fourth quarter.
  • Please tell us if you performed an impairment analysis of the Asset Group during the first quarter, and if so, please tell us the results of the analysis. If you did not perform an impairment analysis, please explain to us why you do not believe such an analysis was necessary.
  • Please tell us the extent to which assets were grouped and the basis for any such grouping in your impairment assessment. Please describe to us what, if any, interdependencies resulted in your conclusions in identifying the lowest level of cash flows. Refer to ASC paragraph 360-10-35-23 through 360-10-35-25.
Financial statement presentation guide - Chapter 8.6: Property, plant and equipment
Property, plant, equipment and other assets guide - Chapter 5: Impairment

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