IAS36 - Impairment of Assets

Question 1

objective of IAS36?

Answer 1

to ensure assets aren’t carried at more than their recoverable amount

Question 2

when are assets carried at higher than their recoverable amount?

Answer 2

when its carrying amount exceeds the amount that would be recovered if it was sold or used

Question 3

carrying amount?

Answer 3

the amount at which the asset is recognised after deducting accumulated depreciation

cost less accum. depreciation

Question 4

cash generating unit?

Answer 4

smallest identifiable group of assets that generates cash inflows

largely independent of cash inflows from other assets

Question 5

corporate assets?

Answer 5

assets other than goodwill that contribute to the future cash flows of both the CGU under review and other CGUs

Question 6

costs of disposal?

Answer 6

costs involved in the sale of an asset or CGU

Question 7

CGU?

Answer 7

cash generating unit

Question 8

asset is impaired when..

Answer 8

CA > RA

Question 9

how does an entity treat assets that may be impaired?

Answer 9

an entity shall assess at the end of each reporting period whether there’s an indication of asset impairment

if indication exists, the entity shall estimate the recoverable amount

Question 10

internal indications of impairment?

Answer 10

• obsolescence/physical damage
• weak economic performance

Question 11

external indications of impairment?

Answer 11

• observable indications that the asset’s value has declined
• loss in market value
• carrying amount of the entity’s net assets exceed its market capitalisation