Week 2 Discussion Post 23 Document

Company name–TheWaltDisneyCompany

Stock ticker –97.18USD(AsonJuly06,2022)

Industry–MediaandEntertainment

Brief description of the company –TheWaltDisneyCompanycame

intoexistenceintheyear1923.Initially,thecompanyoperated

underthenameoftheWaltDisneyStudioandWaltDisney

Productions.However,intheyear1986,itchangeditsnametoThe

WaltDisneyCompany.Thecompanyhasbeenidentifiedasthe

pioneerintheAmericananimationindustrybeforeitstarted

diversifyingintootherbusinessareassuchasthemeparks,

productionandtelevision.

An item from the balance sheet –Anitemthathasbeenselected

fromthebalancesheetofthecompanyisgoodwill.Thevalueofthe

company’sgoodwillasofOctober02,2021,hasbeenvaluedatUSD

78,071andthevalueoftheintangibleassetintheprioryearwas

USD77,689(FiscalYear2021AnnualFinancialReport.waltdisney

company,2022,p.29).Theincreaseinthegoodwillorreputationof

thecompanyinthepastyearindicatesasurgeinthevalueofthe

company.

Valuation policies–Thevaluationpoliciesthatareadoptedbythe

companyhelpindeterminingthefairvalueofafirmoritsassets.In

thecontextofTheWaltDisneyCompany,thegoodwillandother

intangibleassetsofthefirmaretestedforimpairmentonayearly

basis.Incasethereisanecessity,thentheycouldbetestedonan

interimbasis(FiscalYear2021AnnualFinancialReport.waltdisney

company,2022,p.85).Inordertoarriveatthevalueofthegoodwill,

thecompanyinitiallycarriesoutaqualitativeassessmentofthe

goodwilltoidentifywhetheritismorelikelythannotthatthe

carryingamountofgoodwillinareportedunitexceedsthefairvalue.

Ifneedbe,aquantitativeevaluationmaybeconducted.Thekey

factorsthataretakenintoconsiderationinthequalitativeevaluation

ofgoodwillaremacroeconomicvariables,recentmarkettransactions

andalterationsintheestimatedfuturecashflowofareportingunit.

Whileconductingthequantitativeassessment,thefairvalueofevery

goodwillreportingunitiscomparedwithitscarryingamount.Inthe

fiscalyear2021,thecompanybypassedthequalitativetestand

straightwayconductedaquantitativeevaluationofgoodwillfor

impairment(FiscalYear2021AnnualFinancialReport.waltdisney

company,2022,p.85).

Appropriateness of the option–Thevaluationpolicythatisadopted

bythecompanytoevaluatethegoodwillandtheassociated

impairmentisjustified.Thisisbecauseittakesintoaccountboth

qualitativeaswellasquantitativeapproachestogetacomprehensive

insightintothevaluationofthegoodwill(Langeetal.,2014).

References

Fiscal Year 2021 Annual Financial Report.waltdisneycompany.

(2022).RetrievedJuly6,2022,from

https://thewaltdisneycompany.com/app/uploads/2022/01/2021-

Annual-Report.pdf

Google.(2021).Walt Disney Co (DIS) stock price & news.Google

Finance.RetrievedJuly6,2022,from

https://www.google.com/finance/quote/DIS:NYSE?

sa=X&ved=2ahUKEwjN_NeAteP4AhX5SmwGHb9bDBkQ3ecFegQIG

RAa

Lange,C.D.,Fornaro,J.M.,&Buttermilch,R.J.(2014).Qualitative

assessmentofimpairmentforgoodwillandotherindefinite-lived

intangibles.The CPA Journal,2014,22-29.

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