S1 - impairment Flashcards
what is the effect of downwards revaluation
Decrease in market value written off against revaluation reserve up to the value of its balance
Remainder to the income statement as an impairment
Previously impaired assets value could increase —> previous impairment reversed up to values previously written off —> income statement
Balance to revaluation reserve
Reduce revaluation reserve —> debit
what is carrying value
initial cost - depreciation - amortisation - impairment
Value on SOFP
Shouldn’t be carried at any more than their recoverable amount
what is fair value
price that would be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the measurement date
what is recoverable amount
higher of fair value - costs to sell (=net selling price) and value in use
what is value in use
present value of future cash flows from use and disposal
what is revised carrying amount
= lower of carrying amount or recoverable amount
impairment required is the difference between this figure and the current carrying amount
what are the indications of impairment
internal = physical evidence of reduction in assets condition
External = legal or market condition has changed meaning the asset can no longer be used
Use judgement
what are non current assets held for sale
held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use
Must be:
Available for immediacy sale in present condition
Sale must be highly probable
Know the criteria for the sale to be highly probable
what is the measurement of non current assets held for sale
Measurement:
Lower or carrying amount and net selling price
Not continue to be depreciated
Be presented separately on the face of the SOFP
additional disclosures required in the notes
what are discontinued operations
a component of the entity that has either:
been disposed of or
has been classified as held for sale and:
Represents major line of business or
Is part of a single coordinated plan to dispose of a separate major line of business or
Is a subsidiary acquired exclusively for resale
what are the results of discontinued operations
Results of discontinued operations
disclosed separately in the income statement
Minimum disclosure:
Total of post tax profit of discontinued operations
Post tax gain or loss recognised on the measurement to net selling price or on the disposal of the assets constituting the discontinued operation
Further analysis required on the ace of the statement of comprehensive income or in the notes
what are changes, estimates and prior errors for accounting policies
changes - restate comparatives
new IFRS
Relevant and reliable information
accounting estimates
Accounted for prospectively - only future periods
No requirement to restate prior periods
prior period errors
Mistakes, fraud, materiality
Accounted for retrospectively - historical, current and future periods
what is impairment for events after the reporting period
Adjusting events - must be material
provide evidence of conditions that existed at the reporting date
Non adjusting events
indicative of conditions that arose after the reporting period
Dividends declared after the end of the reporting period - disclosed not recognised
Adjust if it impacts going concern
