Impairment of Assets

Question 1

What happens with a downwards revaluation? (3 things)

Answer 1

1. Decrease in market value
2. Written-off against revaluation reserve up to the value of its balance
3. Remainder to the SOPL as an impairment

Question 2

What happens if a previously impaired asset’s market value increases

Answer 2

1. If a previously impaired asset’s market value increases
2. Previous impairment reversed, up to values previously written-off, to SOPL
3. Balance (if any) to revaluation reserve

Question 3

IAS __ Impairment of Assets

Answer 3

IAS 36 Impairment of Assets

Objective:

• Ensure that assets are carried at no more than their recoverable amount
• Where the recoverable amount is lower than the carrying value an impairment loss must be recognised immediately