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    PAS 36 Concept Map

    Uploaded by

    Micah Ramayka
    Events or changes that could lead to impairment of assets include external sources like changes in the discount rate or evidence of obsolescence, and internal sources like decreases in cash flows or significant changes in the technological environment. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment occurs when an asset's carrying amount exceeds its recoverable amount, and it is recognized in profit or loss. Annual impairment tests are required for certain intangible assets and cash-generating units to which goodwill has been allocated. Impairment of goodwill is never reversed.

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    PAS 36 Concept Map

    Uploaded by

    Micah Ramayka
    529 views1 page
    Events or changes that could lead to impairment of assets include external sources like changes in the discount rate or evidence of obsolescence, and internal sources like decreases in cash flows or significant changes in the technological environment. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment occurs when an asset's carrying amount exceeds its recoverable amount, and it is recognized in profit or loss. Annual impairment tests are required for certain intangible assets and cash-generating units to which goodwill has been allocated. Impairment of goodwill is never reversed.

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    Impairment of Assets

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    Events or changes that could lead to impairment of assets include external sources like changes in the discount rate or evidence of obsolescence, and internal sources like decreases in cash flows or significant changes in the technological environment. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment occurs when an asset's carrying amount exceeds its recoverable amount, and it is recognized in profit or loss. Annual impairment tests are required for certain intangible assets and cash-generating units to which goodwill has been allocated. Impairment of goodwill is never reversed.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    529 views1 page

    PAS 36 Concept Map

    Uploaded by

    Micah Ramayka
    Events or changes that could lead to impairment of assets include external sources like changes in the discount rate or evidence of obsolescence, and internal sources like decreases in cash flows or significant changes in the technological environment. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment occurs when an asset's carrying amount exceeds its recoverable amount, and it is recognized in profit or loss. Annual impairment tests are required for certain intangible assets and cash-generating units to which goodwill has been allocated. Impairment of goodwill is never reversed.

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    Events or changes that could lead to impairment of assets (not exhaustive):

    External Sources
    Discount Rate
    Current
    pre-tax
    rate
    Risks
    specific to
    the asset

    Evidence or
    obsolescence
    or physical
    damage of an
    asset
    Discontinuan
    ce, disposal
    or
    restructuring
    plans
    Worsening of
    the economic
    performance

    It is measured as the present value or discounted


    value of future net cash flows (inflows minus outflows) expected to
    be derived from the asset.

    Internal Sources
    Cash Flows:

    Continuing use of
    the asset
    Disposal of the asset
    Pre-tax

    Incremental
    cost directly attributable to
    the disposal of the asset,
    except finance cost and
    income tax expense

    It is the price that would be


    received to sell an asset or paid to
    transfer a liability in an orderly
    transaction between market
    participants at the measurement date.

    RECOVERABLE AMOUNT = Higher of fair value less costs to sell and value in use, whichever is higher

    Significant
    decrease or
    decline in market
    value
    Significant
    changes in
    technological,
    market, legal or
    economic
    environment
    Changes in
    interest rates
    Carrying amount

    Recognition

    ANNUAL IMPAIRMENT TESTS

    Intangible assets with an


    indefinite useful life
    Intangible assets not yet
    available for use
    CGUs to which goodwill has
    been allocated

    IMPAIRMENT = Carrying amount > Recoverable amount

    IMPAIRMENT OF ASSETS
    PAS 36

    Definition: Impairment is a fall in the market value of an


    asset so that the recoverable amount is now less than
    the carrying amount in the statement of financial position.
    Cash Generating unit (CGU) is the smallest identifiable
    group of assets that generate cash inflows from continuing
    use that are largely independent of the cash inflows from
    the other assets or group of assets.

    REVERSAL OF IMPAIRMENT:

    Individual Asset recognized in profit/loss


    unless carried at revalued
    amount
    CGUs allocated to assets of CGU on a prorata basis
    Goodwill Impairment is never reversed

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