PAS 36 outlines the objectives and scope for identifying and recognizing impairment losses for assets, ensuring they are carried at no more than their recoverable amount. It defines key terms such as carrying amount and recoverable amount, and specifies included and excluded assets. The document also details the calculation of value in use, recognition of impairment losses, and necessary disclosures regarding impairment losses in financial statements.
PAS 36 outlines the objectives and scope for identifying and recognizing impairment losses for assets, ensuring they are carried at no more than their recoverable amount. It defines key terms such as carrying amount and recoverable amount, and specifies included and excluded assets. The document also details the calculation of value in use, recognition of impairment losses, and necessary disclosures regarding impairment losses in financial statements.
PAS 36 outlines the objectives and scope for identifying and recognizing impairment losses for assets, ensuring they are carried at no more than their recoverable amount. It defines key terms such as carrying amount and recoverable amount, and specifies included and excluded assets. The document also details the calculation of value in use, recognition of impairment losses, and necessary disclosures regarding impairment losses in financial statements.
PAS 36 outlines the objectives and scope for identifying and recognizing impairment losses for assets, ensuring they are carried at no more than their recoverable amount. It defines key terms such as carrying amount and recoverable amount, and specifies included and excluded assets. The document also details the calculation of value in use, recognition of impairment losses, and necessary disclosures regarding impairment losses in financial statements.
SCOPE DEFINITIONS IMPAIRMENT Objectives: Impairment Loss: Carrying Amount (CA) External Indications: Ensure assets are carried at no more than their Recoverable Amount (RA). > Recoverable Amount (RA) Market value declines Define Recoverable Amount determination. Carrying Amount (CA): Net book value Economic, technological, legal, or Scope: of the asset. market changes Excluded Assets: Recoverable Amount (RA): Higher of Fair Increased interest rates Inventories Value less Costs of Disposal (FV - CD) or Net assets exceed market capitalization Construction contract assets Value in Use (VIU). Internal Indications: Deferred tax assets Fair Value (FV) Obsolescence, damage Financial assets Value in Use (VIU): Present value of Idle assets or held for disposal Investment properties at Fair Value (FV) Agricultural assets at FV expected future cash flows. Poor economic performance Non-current assets held for sale Included Assets: Land, buildings, machinery VALUE IN USE (VIU) RECOGNITION OF Intangible assets IMPAIRMENT CALCULATION Goodwill LOSS Investments in subsidiaries, associates, and REVERSAL OF Based on estimated future joint ventures at cost cash flows. Recognized if CA > GOODWILL IMPAIRMENT Assets revalued under PAS 16 & PAS 38 Reflects possible RA. IMPAIRMENT LOSS variations, time value of Expense unless related Evaluate reversal money, and risks. to revalued asset. Tested annually. potential annually. Discount rate: pre-tax rate Adjust depreciation for Allocate goodwill to reflecting current market No reversal for future periods. CGUs benefiting from conditions. goodwill impairment. synergies. Exclude cash flows from Reversal cannot Compare CGU’s CA DETERMINING financing and tax exceed depreciated payments. with RA: RECOVERABLE AMOUNT historical cost. If RA > CA: No Recognized in If FV - CD or VIU > CA, no impairment. impairment. Profit/Loss unless If FV - CD cannot be determined, use VIU. If CA > RA: Recognize CASH GENERATING UNITS related to revalued For assets to be disposed of, use FV - CD. impairment loss. (CGU) asset.
Determine RA for individual assets or CGU.
CGU: Smallest asset group that generates independent cash inflows. DISCLOSURES By class: Impairment Loss (IL) recognized/reversed in P/L. By segment: IL recognized/reversed. Material Loss/Reversal: Event, amount, and affected asset.
