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  • Abusama Impairment of Assets

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    Garp Barroca
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    Events or changes that could lead to asset impairment include external factors like technological changes or economic downturns, as well as internal factors like physical damage or discontinuation of use. An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment losses are recognized in profit or loss unless the asset is carried at a revalued amount.

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    Events or changes that could lead to asset impairment include external factors like technological changes or economic downturns, as well as internal factors like physical damage or discontinuation of use. An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment losses are recognized in profit or loss unless the asset is carried at a revalued amount.

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    32 views1 page

    Abusama Impairment of Assets

    Uploaded by

    Garp Barroca
    Events or changes that could lead to asset impairment include external factors like technological changes or economic downturns, as well as internal factors like physical damage or discontinuation of use. An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use. Impairment losses are recognized in profit or loss unless the asset is carried at a revalued amount.

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    Events or changes that could lead to impairment of assets (not exhaustive):  It is measured as the present value or discounted
    value of future net cash flows (inflows minus outflows) expected to
    External Sources Internal Sources be derived from the asset.

    ANNUAL IMPAIRMENT TESTS


    Discount Rate Incremental It is the price that would be
    Cash Flows:

      Current
    pre-tax

      Continuing use of cost directly attributable to received to sell an asset or paid to
    the asset the disposal of the asset, transfer a liability in an orderly
    rate
      Intangible assets with an
       Disposal of the asset except finance cost and transaction between market indefinite useful life
       Risks    Pre-tax income tax expense participants at the measurement date.
    specific to
      Intangible assets not yet
    available for use
    the asset
      CGU’s to which goodwill has
    RECOVERABLE AMOUNT
    AMOUNT = Higher of fair value less costs to sell and value in use, whichever is higher  been allocated

       Evidence or Recognition IMPAIRMENT = Carrying amount > Recoverable amount


    obsolescence 
      Significant
    or physical decrease or
    decline in market
    damage of an
    value
    IMPAIRMENT OF ASSETS  REVERSAL OF IMPAIRMENT:
    IMPAIRMENT:
    asset
      Discontinuan   Significant PAS 36 Individual Asset – recognized in profit/loss
    unless carried at revalued
    ce, disposal changes in
    amount
    or technological, CGUs – allocated to assets of CGU on a pro-
    restructuring market, legal or rata basis
    economic Definition: Impairment is a fall in the market value of an Goodwill – Impairment is never reversed
    plans
      Worsening of environment asset so that the “recoverable amount” is now less than 
    the economic 
      Changes in the carrying amount in the statement of financial position.
    performance interest rates

    Cash Generating unit (CGU)  is the smallest identifiable


    group of assets that generate cash inflows from continuing
    use that are largely independent of the cash inflows from
    the other assets or group of assets.

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