IAS 36

Question 1

What is impairment loss?

Answer 1

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

Question 2

What is the carrying amonut?

Answer 2

Cost - accumulated depreciation - accumulated impairment losses

Question 3

What is the recoverable amount?

Answer 3

Higher of asset’s:
Fair value - costs of disaposal
AND
Value in use

Question 4

What is fair value?

Answer 4

Price that would be received to sell an asset or transfer liability between market participants at measurement date

Question 5

What is value in use?

Answer 5

Present value of future cash flows expected to be derived from asset

Question 6

Which types of intangible assets are measured annually recoverable amounts?

Answer 6

Indefinite useful life
Not yet available for use
Goodwill acquired in business combination

Question 7

External source of impairment (market)

Answer 7

Market value declines

Question 8

External source of impairment (negative change)

Answer 8

Negative changes in technology, markets, economy or laws

Question 9

External source of impairment (interest)

Answer 9

Increases in market interest rates

Question 10

External source of impairment (Net assets company)

Answer 10

Net assets of company higher than market capitalisation

Question 11

Internal sources of impairment (obsolescence)

Answer 11

Obsolescene

Question 12

Internal sources of impairment (idle)

Answer 12

Asset is idle

Question 13

Internal sources of impairment (economic)

Answer 13

Worse economic performance than expected

Question 14

If fair value less costs of disposal or value in use is more than carrying amount?

Answer 14

Asset is not impaired

Question 15

If fair value less costs of disposal cannot be determined?

Answer 15

Recoverable amount is value in use

Question 16

What must happen for assets to be disposed of?

Answer 16

Recoverable amount is fair value less costs of disposal

Question 17

What are costs of disposal?

Answer 17

Direct added costs only

Question 18

When is an impairment loss recognised?

Answer 18

Whenever recoverable amount is below carrying amount

Question 19

Hiw is impairment loss recognised?

Answer 19

As an expense, unless it relates to a revalued asset, in this case it’s a revaluation decrease

Question 20

How is depreciation adjusted?

Answer 20

For future periods

Question 21

what js recoverable amount determined for?

Answer 21

For the individual asset

Question 22

What if it’s not possible to determine the recoverable amount?

Answer 22

Determine recoverable amount for asset’s CGU

Question 23

What is teh CGU?

Answer 23

Smallest identifiable group of assets that generates cash inflows independent of others

Question 24

What should happen with goodwill?

Answer 24

Be impaired annually

Question 25

What happens with cash-generating unit which goodwill has been allocated?

Answer 25

Is tested for impairment at least annually by comparing carrying amount of unit with recoverable amount

Question 26

What if recoverable amount of unit exceeds carrying amount of unit

Answer 26

No impairment

Question 27

What if carrying amount of unit exceeds recoverabler amount of unit?

Answer 27

Entity must recognise an impairment loss

Question 28

How is impairment loss allocated to reduce carrying amount of assets of the unit?

Answer 28

Reduce carrying of any goodwill allocated to CGU

Reduce carrying amounts of other assets of unit pro-rata

Question 29

Carrying amonut of an asset should not be reduced below highest of?

Answer 29

Fair value less costs of disposal
Its value in use
Zero

Question 30

What happens with impairment for assets carried at historical cost

Answer 30

Impairment loss is recognised as an expense

Question 31

What happens with impairment for revalued assets (IAS 16)

Answer 31

First OCI

Any remainder as an expense in SPL

Question 32

Reversal for an asset carried at historical cost?

Answer 32

Reversal of impairment loss is recognised in SPL

Question 33

Reversal for an asset carried at revalued assets?

Answer 33

Reversal of impairment loss should be recognised in OCI and revalution surplus in equity

Question 34

How can the asset not be revalued?

Answer 34

To a carrying amount that is higher than what it would have been if asset had not been impaired orgiinally

Question 35

How subsequent depreciation and amortisation be based on?

Answer 35

Its new revalued amount, its estimated residual value and its estimated remaining useful life

Question 36

How should goodwill be treated in a reversal?

Answer 36

An impairment loss for goodwill should not be reversed in a subsequent period