C4 IAS 36 Impairment

Question 1

Identify a potentially impaired asset

- External

Answer 1

External
1. Observable indications that the asset’s value has declined during the period significantly more than expected due to the passage of time or normal use.

2. Technological or market environment, or economic or legal environment
3. Increased interest rate and market rate of return, reducing VIU
4. CA exceeds market capitalization

Question 2

Identify a potentially impaired asset

- Internal

Answer 2

1. Obsolescence or physical damage
2. Idle
   Discontinue/ restructure the operation
   Dispose
   Reassessing as finite
3. Performance will be worse than expected.

Question 3

Measuring the recoverable amount

Answer 3

Higher of
FV less costs of disposal
VIU

Question 4

Fair value?

Answer 4

The price that would be received to sell the asset in an orderly transaction between market participants at the measurement date

Question 5

Costs of disposal

Answer 5

Direct incremental costs attributable

Legal costs, stamp duty, cost of moving

Exclude finance costs and income tax