Write a 8 page essay on Corporate Financial Reporting. Suncor energy Inc. declared force majeure under a contractual obligation, suspended and ceased its operations as a result of a political unrest. Since there has been no resolution of the political situation at the end of second quarter of the year 2012, an impairment test was conducted in the companys assets in Syria. Consequently, the company identified after-tax impairment charges and write downs worth $694 million. The impairment losses identified were recorded as part of depletion, depreciation, amortization and impairment expense and were charged against property plant, and equipment ($604 million) as well as other current assets worth $23 million. Thereafter the company wrote off the remaining Syrian receivables in Syria for $67 million. Previously in December 2011, receivables worth of $64 million were written off. In 2012 (4th quarter), the company received risk mitigation proceeds worth $300 million that were associated with its Syrian operations. After the proceeds were received, the impairment test was conducted in December 31, 2012, implementing the value-in-use methodology. Unexpected cash flow approach was adopted by the company which was based on the year end reserves data of 2011 which were updated with three scenarios for the companys best estimate of price realizations as well as remaining revenues. The scenarios represent: recommencement of operations in a year, recommencement of operations is 5 years, total loss. The scenarios where the companies recommence their operations include repayment of the risk mitigation proceeds according to the terms within the agreement. The scenarios were weighted equally on the basis of the companys best estimate and were valued according to the risk adjusted discount rate of 19%. On the basis of this assessment, the company identified an impairment reversal worth $177 million which were related to the companys
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