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IAS 36 – IMPAIRMENT OF ASSETS - Coggle Diagram
IAS 36 – IMPAIRMENT OF
ASSETS
When
Carrying amount(CA) (Accounting records)
Recoverable amount (RA) less than
Higher of
Value in use
NRV=FV-cost to sell
If RA> CA=> No impairment
If FV-cost to sell impossible to set=> Use value in use
CA- RA=Impairment Loss
Indications of impairment
External sources
Decline in market value
Significant changes (market,technology, legal, economic)
Increase in interest rates
CA > market capitalization
Internal sources
Significant changes (restructuring, discontinuing)
Internal reporting evidence
Obsolescence/physical damage
Accounting
Cost Model
IL go to SOFP
Debit: P/L-impairment loss
Credit: Asset (adjustment)
Revaluation Model
IL goes against revaluation reserve
Credit: Asset (adjustment)
Debit: Revaluation reserve
IL> Revaluation surplus
Credit: Asset (adjustment)
Dedit: P/L-impairment loss
Debit: OCI-Revaluation surplus
Cash generating unit (CGU)
Definition
Smallest identifiable group
Generate cash inflows largely independent from other assets
Goodwill
Testing of CGU with goodwill
Test annually
whenever has an indication of impairment
CGU with goodwill
Reduce CA of any goodwill allocated to CGU
Reduce CA of other assets of CGU pro-rata
Do not reduce CA of the highest of:
Its FV-cost to sell
Zero
Its FV-cost to sell