Accounting choices under ifrs and their effect on over-investment in capital expenditures

 
 
41
48
47
59
65
66
0
10
20
30
40
50
60
70
2002
2003
2004
2005
2006
2007

 
 
This figure presents the frequency of impairment losses for PPE recognized by 321 
EU firms over the period 2002-2007.
Frequency 
Year 

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45 
TABLE C1 
Comparison of Impairment Rules for PPE between IFRS
and Domestic GAAP
 
 
Impairment Rules for PPE
IFRS (IAS 36)
Domestic GAAP
Detailed procedures for when impairment 
occurs and for measuring the amount of 
impairment 
No detailed procedures under most EU 
countries’ domestic GAAP 
Disclosure of the impairment testing 
procedures 
No disclosure of the impairment testing 
procedures 
More comparable among EU firms 
Less comparable among EU firms 
More informative, more transparent, and 
more comparable 
Less informative, less transparent, and 
less comparable 
Strict Impairment Rules
Loose Impairment Rules
 
 
 
 
This table presents a comparison of impairment rules for PPE between IFRS and domestic 
GAAP in the following EU countries: France, Ireland, Italy, Netherlands, Norway, Poland, 
Spain, Sweden, and United Kingdom. 

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46 
TABLE C2 
Distribution by Country & Industry and Descriptive Statistics
 
Panel A: Distribution by Country & Industry
Country 
%
Industry
%
France
27.10%
Oil & Gas
4.05%
Ireland
3.43%
Building Construction
3.43%
Italy
2.18%
Heavy Construction
2.80%
Netherlands
1.87%
Food Products
4.36%
Norway
3.74%
Printing and Publishing
4.36%
Poland
2.18%
Primary and Fabricated Metal Products
6.54%
Spain
5.61%
Chemicals and Allied Products
6.54%
Sweden
16.82%
Industrial, Commercial & Computer Equipment
7.48%
United Kingdom
37.07%
Electronic and Other Electrical Equipment 
4.05%
100.00%
Transportation Equipment
6.23%
Medical and Industrial Devices
3.74%
Communications
3.74%
Electric, Gas, and Sanitary Services
3.43%
Wholesale Trade
5.61%
Business and Computer Services
16.82%
Consulting and Research Services
4.67%
Others
12.15%
100.00%