IAS 36

Question 1

Impairment loss

Answer 1

is the amount by which the carrying amount of an asset exceeds its recoverable amount

Carrying amount- Recoverable amount

Question 2

Recoverable amount

Answer 2

higher of
1.Fairvalue-Cost to sale
2.Value in use

Question 3

Carrying amount

Answer 3

is the amount by which the carrying amount of an asset exceeds its recoverable amount

Question 4

Value in use

Answer 4

is the present value of the future cash flows (net) expected to be derived from an asset, including its eventual disposal.

Question 5

Fair Value

Answer 5

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

Question 6

Cost to sell

Answer 6

are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Question 7

What is Prudence concept and how it is applied to IAS 36?

Answer 7

The concept of prudence requires that assets must not be overstated, and accordingly,
IAS 36 ensures that an asset’s carrying amount must not exceed its recoverable amount. Therefore, IAS 36 requires that if an asset’s carrying amount exceeds its recoverable amount, then it is written down to recoverable amount by recognising impairment loss.

Question 8

Entry of Impairment loss

Answer 8

Imp Loss Dr
Acc imp loss Cr

Question 9

When when remaining life is used while calculating dep exp?

Answer 9

1.Est change
Book Value at the date of est/Remaining life
(at the date of change in estimate)

2.Revaluation
Latest revalued amount/Remaining life
(at the date of latest revaluation)

3.Impairment
Revised book value/Remaining life
(at the date of impairment)

residual value purani ho ya revised minus must hogi