IAS 36 impairment of assets

Question 1

impairment

Answer 1

impairment is a reduction in the recoverable amount if an asset or CGU below its carrying amount

Question 2

calculating impairment loss

Answer 2

the recoverable amount is the higher of the fair value less costs to sell and value in use

Question 3

fair value

Answer 3

fair value is defined in IFRS 13 Fair value measurement as the price received when selling an asset in an orderly transaction between market participants at the measurement date

Question 4

costs to sell

Answer 4

costs to sell are incremental costs directly attributable to the disposal of an asset

Question 5

value in use

Answer 5

calculated by estimating the future cash inflows and outflows from the use of the asset and its ultimate disposal, and applying a suitable discount rate to these cash flows.

Question 6

recognition

Answer 6

charged immediately in the statement of profit or loss and OCI

Question 7

CGU

Answer 7

a CGU is the smallest group of asset that generates independent cashflows