IAS 36 Flashcards
What is impairment loss?
Amount by which the carrying of an asset exceeds its recoverable amount
What is the carrying amonut?
Cost - accumulated depreciation - accumulated impairment losses
What is the recoverable amount?
Higher of asset’s:
Fair value - costs of disaposal
AND
Value in use
What is fair value?
Price that would be received to sell an asset or transfer liability between market participants at measurement date
What is value in use?
Present value of future cash flows expected to be derived from asset
Which types of intangible assets are measured annually recoverable amounts?
Indefinite useful life
Not yet available for use
Goodwill acquired in business combination
External source of impairment (market)
Market value declines
External source of impairment (negative change)
Negative changes in technology, markets, economy or laws
External source of impairment (interest)
Increases in market interest rates
External source of impairment (Net assets company)
Net assets of company higher than market capitalisation
Internal sources of impairment (obsolescence)
Obsolescene
Internal sources of impairment (idle)
Asset is idle
Internal sources of impairment (economic)
Worse economic performance than expected
If fair value less costs of disposal or value in use is more than carrying amount?
Asset is not impaired
If fair value less costs of disposal cannot be determined?
Recoverable amount is value in use
What must happen for assets to be disposed of?
Recoverable amount is fair value less costs of disposal
What are costs of disposal?
Direct added costs only
When is an impairment loss recognised?
Whenever recoverable amount is below carrying amount
Hiw is impairment loss recognised?
As an expense, unless it relates to a revalued asset, in this case it’s a revaluation decrease
How is depreciation adjusted?
For future periods
what js recoverable amount determined for?
For the individual asset
What if it’s not possible to determine the recoverable amount?
Determine recoverable amount for asset’s CGU
What is teh CGU?
Smallest identifiable group of assets that generates cash inflows independent of others
What should happen with goodwill?
Be impaired annually
What happens with cash-generating unit which goodwill has been allocated?
Is tested for impairment at least annually by comparing carrying amount of unit with recoverable amount
What if recoverable amount of unit exceeds carrying amount of unit
No impairment
What if carrying amount of unit exceeds recoverabler amount of unit?
Entity must recognise an impairment loss
How is impairment loss allocated to reduce carrying amount of assets of the unit?
Reduce carrying of any goodwill allocated to CGU
Reduce carrying amounts of other assets of unit pro-rata
Carrying amonut of an asset should not be reduced below highest of?
Fair value less costs of disposal
Its value in use
Zero
What happens with impairment for assets carried at historical cost
Impairment loss is recognised as an expense
What happens with impairment for revalued assets (IAS 16)
First OCI
Any remainder as an expense in SPL
Reversal for an asset carried at historical cost?
Reversal of impairment loss is recognised in SPL
Reversal for an asset carried at revalued assets?
Reversal of impairment loss should be recognised in OCI and revalution surplus in equity
How can the asset not be revalued?
To a carrying amount that is higher than what it would have been if asset had not been impaired orgiinally
How subsequent depreciation and amortisation be based on?
Its new revalued amount, its estimated residual value and its estimated remaining useful life
How should goodwill be treated in a reversal?
An impairment loss for goodwill should not be reversed in a subsequent period
