IAS 36- Imparement Of Non-Current Assets Flashcards

1
Q

How can we recover a value of an asset?

A
  • sell it (net realisable value)

- the asset can be used to generate cash flow (value in use)

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2
Q

Requirements:

A

Carrying amount
l
lower of
/ \
Net book value Recoverable amount
l
Higher of
/ \
Net realisable value Value in use

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3
Q

The objectives of IAS 36- are to ensure that

A
  • non current assets are recorded in the accounts at no more than their recoverable amount
  • any resulting impairment loss is measured and recognised on a consistent basis; and sufficient information is disclosed so users understand impact of impairment
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4
Q

What does IAS 36 require

A
  • IAS 36 requires that impairment reviews should be carried out if there is an indication that an individual asset may have fallen in value
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5
Q

Indicators in a possible fall in value include:

A
  • a loss in the current period together with either past losses or expected future losses
  • a significant fall in the market value of an asset
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6
Q

Business problems that might cause impairment

A
  • a fall in price due to increased competition
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