This is a post of my own detailed and thorough explanation on the standards of the subject I'm taking, P2 Corporate Reporting (ACCA)
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IAS 36 Impairment
Impairment of assets happen when carrying amount more than recoverable amount (CA>RA). Impairment review will be carry out once there is indication of information. There are internal information like wear and tear or damaged while external information are like technology change, fall in market price, or obsolete. There are two assets that need to carry out yearly impairment review which are intangible assets with indefinite useful life and goodwill.
Impairment loss = Carrying amount > Recoverable amount
Carrying amount is the net book value of the asset.
Recoverable amount is the higher of fair value less cost to sell or value in use. Value in use is the present value of the future cash flow when the asset is used continuously.
Impairment loss will be recognize as expenses. If there are assets previously revalued, it must be set off from surplus.
Reversal of Impairment
This happens only when the value of asset increases. Impairment loss previously recognized no longer exist. The new carrying amount must not exceed the carrying amount of asset as if no impairment has previously taken place.
Cash Generating Unit (CGU)
It is the smallest identifiable group of assets that generates cash flows. Impairment loss will be firstly allocated to the assets specifically impaired, goodwill and then it will be pro-rate over the remaining assets. It must not be allocated to themonetary assets like cash, bank, loan and accounts receivables or payables.
Ends,
IAS 36 Impairment
Impairment of assets happen when carrying amount more than recoverable amount (CA>RA). Impairment review will be carry out once there is indication of information. There are internal information like wear and tear or damaged while external information are like technology change, fall in market price, or obsolete. There are two assets that need to carry out yearly impairment review which are intangible assets with indefinite useful life and goodwill.
Impairment loss = Carrying amount > Recoverable amount
Carrying amount is the net book value of the asset.
Recoverable amount is the higher of fair value less cost to sell or value in use. Value in use is the present value of the future cash flow when the asset is used continuously.
Impairment loss will be recognize as expenses. If there are assets previously revalued, it must be set off from surplus.
Reversal of Impairment
This happens only when the value of asset increases. Impairment loss previously recognized no longer exist. The new carrying amount must not exceed the carrying amount of asset as if no impairment has previously taken place.
Cash Generating Unit (CGU)
It is the smallest identifiable group of assets that generates cash flows. Impairment loss will be firstly allocated to the assets specifically impaired, goodwill and then it will be pro-rate over the remaining assets. It must not be allocated to the
Ends,
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