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4-NCA - Coggle Diagram

- - - - Evidence? Yes?
        
        Where there is evidence of impairment, the entity should conduct an impairment review
        
        After the impairment review
        
        Depreciation/amortisation is adjusted in future periods to allocate the assets' revised CA less its residual value on a systematic basis over its remaining useful life
      - Evidence? Indication? No
        
        There is still an annual impairment test for
        
        Intangible assets with an indefinite useful lives
        
        Goodwill acquired in a business combination
        
        Intangible assets not yet available for use
    - - External
        
        Observable indication that the asset value has declined more than expected due to passage of time or normal use
        
        Significant changes with an adverse effect on the technological or market environment, or in the economic or legal environment
        
        Increase in the interest rates which increase the discount rate and reduce the value in use
        
        CA > Market capitalisation
      - Internal
        
        Evidence of obsolescence or physical damage
        
        Once the asset is classified as HFS
        
        The asset becomes idle
        
        Plans to discontinue/ restructure the operations to which the asset belongs
        
        Plans to dispose of the asset before the previously expected date
        
        Reassessing the asset's UL as finite rather than indefinite
        
        Internal evidence available that asset performance will be worse than expected
  - - - FVLCOD
        
        The price that would be received to sell an asset in an orderly transaction between market participants at the measurement date, less the direct incremental costs attributable to the disposal of the asset
        
        Example of cost of disposal
        
        Legal cost
        
        Stamp duty
        
        Similar transaction taxes
        
        Cost of removing the asset
        
        Direct incremental cost to bring the asset into conditions for its sale
        
        Excludes
        
        Finance cost
        
        Income tax expense
      - VIU
        
        PV of estimated future cash flows generated by the asset, including its estimated net disposal value at the end of its expected UL
        
        Cash flow projections
        
        Depends on the most recent management-approved budget/forecasts
        
        They should cover a max. period of 5 years, unless a longer period can be justified
        
        Includes
        
        Projections of cash inflows from continuing use of the asset
        
        Projections of cash outflows necessarily incurred to generate the cash inflows from continuing use of the asset
        
        Net cash flows, if any, for the disposal of the asset at the end of the useful life
        
        Future overheads that can be directly attributed, or collected on a reasonable and consistent basis
        
        Excludes
        
        Cash outflows relating to obligations recognised as liabilities (to avoid double counting)
        
        The effects of any future restructuring to which the entity is not yet committed
        
        Cash flows from financing activities or income tax receipts and payments
        
        Discount rates
        
        Pre-tax that reflects current market assessment of
        
        Time VFM
        
        Risks specific to the asset for which future cash flow estimates have not been adjusted
  - - - The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets
    - - Goodwill does not generate independent cash flows by itself and therefore is included in the CGU to which it belongs. The CGU is tested for impairment
      - However, there are some goodwill that cannot be allocated to CGU on a non-arbitrary basis
        
        They are instead allocated to the group of CGUs to which it relates to
        
        Due to different nature and risks
    - - Group or divisional assets
        
        Examples
        
        Head office building
        
        Research center
      - Do not generate cash inflows independently from other assets, therefore their CA can be fully attributed to a CGU under review
      - Treated similar way as goodwill
      - Includes corporate assets or a portion of them that can be allocated on a reasonable and consistent basis. If this is not possible, the unallocated assets are tested for impairment as part of the group of CGUs to which they can be allocated on a reasonable and consistent basis
  - - - The CA of assets cannot be reduced below the higher of FVLCOD and the VIU and 0
  - - - Including allocated goodwill and any portion of the CA amount of corporate assets that can be allocated on a reasonable and consistent basis
    - - Test the smallest group of CGUs that includes CGU under review and to which the goodwill can be allocated/ a portion of the CA of corporate assets can be allocated on a reasonable and consistent basis
  - - - Allocated to the assets of the CGU
    - - Pro rata with the CA of those assets
      - Once recognised, impairment losses are not reversed
    - - Its RA
      - Its depreciated CA had on impairment loss originally been recognised
- - - - For the use in the production of G&S
      - For rental to others
      - For administrative purposes
  - - - If they are capitalised, they will be usually aggregated and treated as one
    - - Expenditure to renew individual parts can then be capitalised
  - - - Measured at cost which includes
        
        Purchase price less trade discounts and rebate
        
        Directly attributable costs of bringing the assets to working condition and intended use
        
        Employee benefit cost
        
        Site preparation
        
        Professional fees
        
        Site restoration provision, where not included in the cost of inventories produced
        
        Finance cost
      - Subsequently
        
        Entity can choose between
        
        Cost model
        
        Cost less depreciation and impairment loss
        
        Revaluation model
        
        Revalued amount less depreciation and impairment loss
        
        If this model is applied
        
        Revaluation must be carried out regularly, depending on volatility
        
        Should be revalued to FV, using FV hierarchy in IFRS 13
        
        The whole of the class of the assets should be revalued at the same time
  - - - The exchange transaction lacks commercial substance
      - FV of neither of the assets exchanged can be measured reliably