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IAS 36: IMPAIRMENT OF ASSETS - Coggle Diagram
IAS 36: IMPAIRMENT OF ASSETS
APPLIES TO
Land, building, machinery (IAS 16)
Investment property at cost (IAS 40)
Intangible assets (ÍA 38)
Goodwill
subsidiaries, associates, JV at cost
Assets at revalued amounts
indication of impairment
external sources
decline in market value
significant charges
technology, legal, economic
Increase in interest rates
CA > market capitalization
internal sources
decline in market value
Internal reporting evidence
obsolescence/physical damage
recognition
the recoverable amount should be calculated
the asset should be written dơn to recoverable amount
the impairment loss should be immediately recognised in P/L statement
measurement
recoverable amount
higher of asset's/CGU's
fair value < cost to sell
If any of these > CA -> no impairment
If FV-cost to sell impossible to set -> Use value in use
Value in use
future cash flow
discounting
discouting rate
= pre-tax rate that reflects curent market assessment of
time value of money
risk specific to asset
market rate
when no market rate
weighted average cost of capital
incremental borrowing rate
fair value costs to sell
a binding sale agreement
the current market price less cost of disposal
annual impairment reviews
no indication of impairement then no further action need be taken
exception
goodwill acquired in a business combination
an intangible asset with an idenfinite useful life
an intangible asset not yet available for use
impairment loss
=carrying amount - recoverable amount
cost model
Dr P/L - impairment loss ; Cr asset (adjustment)
revaluation model
Dr OCI - revaluation surplus ; Cr P/L - impairment loss
first đeuct to specific asset
deduct impairment in GW value
cash generating unit (CGU)
= smallest identifiable group of asset that generates cash inflows largely indepentdent from other asset
carrying amount
atributes assets
assets allocated on reasonable
consistent basis
recoverable
any recognized liability
CGU with goodwill
reversal of impairment loss
external sources
increase in market value
significant changes
decrease in interest rates
internal sources
international reporting evidence