IAS 36

Question 1

Impairment test: INDV ASSET must be conduct on a ……. basis.

Answer 1

Asset by asset

Question 2

Impairment test : CGU ONLY if and asset is not capable of generating …….. ……. Assign that asset to ……….. ………. ……… that can geenrate independent CF.

Answer 2

1 - independent CF
2 - smallest group asset

Question 3

CF 2018 consistent with impairment using the …….. concept

Answer 3

prudence

Question 4

CGU consist of A (e.g ias 16) + L (e.g. DM cost), what other scope does it covers?

Answer 4

ias 38 (cost/revl) , 40 (cost) and ifrs 3

Question 5

If there is a biz combi (ifrs 3) cal of GW will be relevant, what to check for when company has many assets acquired?

Answer 5

CGU

Question 6

Net cash flow (when calculating VIU) defines NET as

Answer 6

Inflow (continued use of asset in its PRESENT CONDITION and ultimate disposal

outflow (maintenance exp) - to earn inflow in its PRESENT CONDITION

Question 7

cash outflow does not include 4 things (in calc VIU)

Answer 7

1 - CF relate to ENHANCING asset
2 - CF relates to FUTURE restructuring
3 - Inc Tax receipt / pay
4 - CF from FINANCING actvt

Question 8

In computing VIU, disc factor is use to calculate PV of NET fcf . How to determine discount factor? and if co has difficulties in determining discount rate…

Answer 8

MKT participants perspective
-pretax disc rate
-TVOM
-using asset specific to disc rate

IF DIFFICULT; surrogates/ substitutes be used:
-WACC
-incremental borrowing rate
-other mkt borrowing rate

subject to Adj for risk specific to entity:
-country risk
-currency risk
-price risk

Question 9

What basis is used in calculating VIU?

Answer 9

-most recent financial budget
-reasonable & supportable assumptions
-mgt based estimates (2QC)
-max 5 yrs

Question 10

Why does calculation of VIU is up to max of 5 yrs?

Answer 10

CFS are prepared by EXTRAPOLATED projection usiNG STEADY DECLINING GROWTH RATE (unless increased growth rate is justifiable)

-Biz envi keeps changing
-Usage of asset (tech-wise not up to date)

Question 11

what is CGU?

Answer 11

smallest group of asset that are capable of generating feb

Question 12

Asset within CGU can be …….. BUT CGU compared to another CGU is ……….

Answer 12

1 - dependent
2 - independent

Question 13

what is rule 1 of CGU and its exception when allocating impairment loss?

Answer 13

allocate impairment loss to assets on a PRO-RATA BASIS, then GW
exception - when there is evidence on a particular asset within the CGU being impaired, must first charged to specific asset

Question 14

what is rule 2 of CGU when allocating impairment loss?