Impairment Analysis of Non-current Assets under DCF Based-test in the Jordanian Industrial Shareholding Companies

Aims: To examine the significance differences between discounted operating cash flow associated with non-current assets and the impairment loss for 2005 compared to 2006, 2006 compared to 2007, 2007 compared to 2008.Moreover,estimating value in use through future cash flows attributable to the asset under DCF Based-test. To determine impairment trends by showing ratios of companies that have increasing trends, decreasing or fluctuated trends for the years 2005-2008.

Study Design: Data were collected for the period 2005 to 2008 from Annual reports issued by Amman Stock Exchange (ASE) of the selected industrial public shareholding companies. For this study, 30 industrial companies impaired their non-current assets were selected out of 73 working Jordanian industrial companies during the study period; Descriptive statistic has been used in this study, in addition to Wilcoxon Signed Ranks Test.

Results: Based on the financial data in the companies’ financial reports, about (58.9%), or 30 companies, apply asset impairment accounting. For companies implement IAS (36), impairment loss should be recognized, measured, and disclosed separated from depreciation. Impairment loss can be affected by discount rate, and future cash flows.