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IAS 36 Impairment of Assets - Coggle Diagram
IAS 36 Impairment of Assets
1. Introduction
Definition
When the Carrying Amount (CA) of an entity's asset(s) is higher than its Recoverable Amount (RA) (CA > RA)
Impairment Indicators
Internal Indicators
Declining performance
Loss making entity
Physical damage
External Indicators
Changes in technology
Low market capitalisation
Decline in market value
2. Measurement
Find RA: Higher of
Fair Value LESS Cost to Sell
Value in use (discounted future cash flow)
Find Impairment Loss
Difference between CA and RA
Charge to OCI up to balance in OCE, otherwise charge to P/L
Find CA
4. Reversal of Impairment
Reversal for CGU is allocated to the assets on pro rate basis
CA will not exceed RA
Impairment loss on Goodwill are not reversed
5. Cash Generating Unit
Definition
Smallest identifiable group of assets that generate cash flow which are independent from other assets or groups of assets
Allocation of impairment loss for CGU
Allocate to Goodwill up to amount of Goodwill
Remaining amount to be allocated to other non-current assets on pro rate basis