Several financial indicators in a company’s financial statements are based on management estimates:
- write-downs of receivables and inventories;
- useful lives of property, plant and equipment and intangible assets;
- estimation of the value of assets recognised at fair value;
- recognition of provisions;
- impairment testing.
Management estimates thus play a key part in reliable financial reporting. Making accounting estimates is, however, a complex and time-consuming process. The main challenge lies not in accumulating the data to form the basis for the estimates but in the preparation of accounting estimates in compliance with accounting standards.
KPMG’s accounting advisory professionals can advise and assist you in the preparation of accounting estimates.
