IU 05-16]. IAS 41 requires number of disclosures. BC223-BC226), Early application (paragraph 140) (paras. In cases where the lessee concludes that the buyer would not BC131-BC177), Allocating goodwill to cash‑generating units (paragraphs 80-87) (paras. 59-60) Use of provisions (paras. ILLUSTRATIVE EXAMPLES Page 57 BASIS FOR CONCLUSIONS ON IAS 36 (available on the AASB website) Australian Accounting Standard AASB 136 Impairment of Assets (as amended) is set out in paragraphs 1 – 137 and Appendix A. If you navigate away from this document, the view date will reset. In addition, IFRS and its interpretation change over time. In addition, the … 36-52) Reimbursements (paras. Contents. Therefore, the asset should be assessed for impairment in its own right, rather than as part of a CGU. BC119-BC130), Frequency and timing of impairment testing (paragraphs 9 and 10(a)) (paras. Example 36—Incremental costs of obtaining a contract ... IE2 Examples 1–4 illustrate the requirements in paragraphs 9–16 of IFRS 15 on identifying the contract. Page 5 of 52. See also illustrative examples 5 and 6 to IAS 36. Contents. BCZ230-BCZ233). BCZ40-BC80), Expected value approach (paras. BC170A), Timing of impairment tests (paragraphs 96-99) (paras. ... Financial liabilities and equity (IFRS 9, IAS 32) Chapters by name (Accounting to Fair value) Accounting policies, accounting estimates and errors (IAS 8) Consolidated financial statements (IFRS 10) A limited amendment was made in 2000. 93-94A) Effective date (paras. BCZ37-BCZ39), Value in use (paragraphs 30-57 and Appendix A) (paras. Previous Section Next Section . IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . CS 8.1 Impairment of assets Source: IFRS - IAS 36 Illustrative Examples Impairment of Assets – Illustrative examples Example 1 Identification of cash-generating units A - Retail store chain Background Store X belongs to retail store chain M. X makes all its retail purchases through M’s purchasing centre. regional basis. Viewpoint - Global. BC229), History of the development of a standard on impairment of assets (paras. The private railway could be sold only for scrap value and it does not generate cash inflows that are largely independent of the cash inflows from the other assets of the mine. Preparing cash flow projections that exclude such items would often necessitat… In cases where the lessee concludes that the buyer would not BCZ113-BC118), Internal transfer pricing (paragraph 70) (paras. In addition, IFRS and its interpretation change over time. Illustrative IFRS consolidated financial statements - Investment property 2020. BCZ46-BCZ51), Discount rate (paragraphs 55-57 and A15-A21) (paras. 58-64), Cash-generating units and goodwill (paras. A company must assess at each balance sheet date whether an asset is impaired. Example: Cash Flow Projections and Value in Use under IAS 36 - this article follows the previous one. Example 1 Identification of cash-generating units. BCZ31-BCZ39), Net realisable value (paras. BC228A), Transition provisions for Recoverable Amount Disclosures for Non-Financial Assets (paras. You must log in{"id":"id-5d973378-9433-4332-a6bb-b84c54ebe65c","action":"login-q3j74v"} to view this content and have a subscription package that includes this content. 'Set the date' will change the date at which you are viewing the document. BC227-BC228), Transitional provision for Improvements to IFRSs (2009) (para. 3 | IAS 36 Impairment of Assets IASB APPLICATION DATE (NON-JURISDICTION SPECIFIC) IAS 36 is applicable for annual reporting periods commencing on or after 1 January 2005. 65-108), Reversing an impairment loss (paras. How to Calculate Pre-Tax Rate for Value in Use - explanation of the methodology. Section A: IAS 36 at a glance BC137-BC159), Recognition and measurement of impairment losses (paragraphs 88-99 and 104) (paras. IAS 19 excel examples: simple calculation of defined benefit plan; IAS 21 excel examples: recognition of exchange differences; translation of a foreign operation; IAS 23 excel examples: exchange differences eligible for capitalisation; IAS 28 excel examples: illustration of application of equity method; accounting for a downstream transaction Deferral Accounts, IAS 26 Accounting and Reporting by Retirement Benefit Plans, IAS 27 Separate Financial Statements, IAS 29 Financial Reporting in Hyperinflationary Economies or IAS 34 Interim Financial Reporting. BCZ96-BCZ97), Recognition based on a ‘probability’ criterion (paras. One of the specified indicators of impairment in NZ IAS 36, paragraph 12 (e), is ‘evidence is available of obsolescence or physical damage of an asset’. Example 1 An acquired customer list Example 2 An acquired patent that expires in 15 years Example 3 An acquired copyright that has a remaining legal life of 50 years ... Reasons for revising IAS 36 IN2 The International Accounting Standards Board developed this revised IAS 36 as part of its project on business combinations. If the impairment test is performed at a level such that the CGU is too small, it is likely that the entity will recognise excessive impairment charges. Financial statements disclose corresponding information for the preceding period (comparatives), unless a IAS 41 then deals with gains and losses, inability to measure fair value reliably, provides rules for government grants related to biological assets. • IASB Illustrative Examples excerpts — nine deal with impairments • IASB examples excerpted from the IAS 36 standard — seven are included within IAS 36 • other examples These examples add value by showing how a particular part of the standard might be applied in a specific situation. History of amendments; Document overview; Tools; Set document view date. BC216-BC222), Transitional impairment test for indefinite‑lived intangibles (paras. BC160-BC170), Changes as a result of 2008 revisions to IFRS 3 (Appendix C) (para. measure of value of ‘net’ economic benefits embedded in a fixed asset that can be unlocked in event of the sale of the asset Practical guide to Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 for interest rate benchmark (IBOR) reform The IASB has issued amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 that address issues arising during the reform of benchmark interest rates including the replacement of one benchmark rate with an alternative one. ILLUSTRATIVE EXAMPLES FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS EDITION. This appendix is an integral part of the Standard. Menu. IAS 36 — Impairment of Assets. IAS 36 also outlines the situations in which a company can reverse an impairment loss. IFRS Manual of Accounting . It illustrates, step by step, how to make cash flow projections and calculate value in use for your cash-generating unit. BCZ178-BCZ181), Reversing impairment losses for assets other than goodwill (paragraphs 110-123) (paras. regional basis. Set a date to view the document . BetterRegulation.com © 2020 All rights reserved. BC210-BC228C), Transitional impairment test for goodwill (paras. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IAS 36 — Impairment of Assets ... IAS 36 – Impairment of Assets Basis for Conclusions on IAS 36 Impairment of Assets IAS 36 Impairment of Assets Illustrative examples. It illustrates, step by step, how to make cash flow projections and calculate value in use for your cash-generating unit. IAS 36 provides guidance in the form of a list of internal and external indicators of impairment. Terms defined in this Standard are in italics the first time they appear in the Standard. IAS 36 seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. BCZ105-BCZ107), Revalued assets: recognition in the income statement versus directly in equity (paras. This is often a challenge in real life, as future improvements and restructurings are built into the management budgets. BC209E-BC209Q), Transitional provisions (paragraphs 138-140) (paras. Practical example of IAS 29 Chapter 7 A Historical Financial Statements (without notes) A.I Historical Balance Sheets as at 31 December 2003 and 2002 34 A.II Historical Income Statement for the year ended 31 December 2003 35 A.III Historical Statement of Cash Flows for the year ended 31 December 2003 36 –37 Example: Cash Flow Projections and Value in Use under IAS 36 - this article follows the previous one. indefinite useful lives (IAS 36.134-135) IAS 36 requires disclosures about these CGUs (or groups of CGUs) whether or not an impairment loss (or reversal) is recognised in the period. One factor specifically noted by IAS 36 as an external indicator of impairment is that the carrying amount of the net assets of the 61-62) Application of the recognition and measurement rules (paras. 36.78 and the IFRS Interpretations Committee discussion [IAS 36.29, 78. IAS 36 states (IAS 36.44-49) that projected cash flows should exclude any estimated future cash inflows or outflows expected to arise from future restructurings (until the criteria for recognition of provisionare met) or from improving or enhancing the asset’s performance. IAS 36 — Impairment of Assets ... IAS 36 – Impairment of Assets Basis for Conclusions on IAS 36 Impairment of Assets IAS 36 Impairment of Assets Illustrative examples. Using present value techniques to measure value in use. The amended standard and new standard are effective for periods beginning on or after 1 January 2017 and 1 January 2018, respectively. Volume A - A guide to IFRS reporting Volume B - Financial Instruments - IFRS 9 and related Standards Volume C - Financial Instruments - IAS 39 and related Standards IFRS disclosures in practice Model financial statements for IFRS reporters CS 8.1 Impairment of assets Source: IFRS - IAS 36 Illustrative Examples Impairment of Assets – Illustrative examples Example 1 Identification of cash-generating units A - Retail store chain Background Store X belongs to retail store chain M. X makes all its retail purchases through M’s purchasing centre. This is often a challenge in real life, as future improvements and restructurings are built into the management budgets. You can find the video in the bonus section. It provides detailed guidance along with illustrative examples. Previous Section Next Section . BC56-BC80), Consideration of future tax cash flows (paras. The chapter on impairment of assets and non-current assets held for sale covers: Impairment of assets (IAS 36) Examples of … BCZ85), Interaction with IAS 12 (paras. Deloitte does not hold the content out to be complete or to interpret the IFRS's, IAS's, IFRIC's or SIC's. IAS 36 provides guidance in the form of a list of internal and external indicators of impairment. IAS 36 Impairment of Assets 2017 - 07 2 An assets value in use is the present value of the future cash flows expected to be derived from an asset or cash generating unit. Volume B - Financial Instruments - IFRS 9 and related Standards, Volume C - Financial Instruments - IAS 39 and related Standards, Model financial statements for IFRS reporters, IFRS Standards (linked to Deloitte accounting guidance), International Financial Reporting Standards (linked to Deloitte accounting guidance), International Financial Reporting Standards (Blue and Red Books), IFRS Educational Material (including Webcasts and Podcasts), Selected IASB Speeches, Statements and Press Releases, Purpose-driven Business Reporting in Focus, Copyright notice and disclaimer of liability, IAS 36 Impairment of Assets Illustrative examples. IAS 19 excel examples: simple calculation of defined benefit plan; IAS 21 excel examples: recognition of exchange differences; translation of a foreign operation; IAS 23 excel examples: exchange differences eligible for capitalisation; IAS 28 excel examples: illustration of application of equity method; accounting for a downstream transaction Let’s look at the examples provided to us in IAS 36: A mining entity owns a private railway to support its mining activities. The disclosures are primarily concerned with the assumptions and estimates used in determining VIU or FVLCD, whichever supports the recoverable amount. the higher of fair value less costs of disposal and value in use). 36.78 and the IFRS Interpretations Committee discussion [IAS 36.29, 78. One factor specifically noted by IAS 36 as an external indicator of impairment is that the carrying amount of the net assets of the IAS 34 Interim Financial Reporting was issued by the International Accounting Standards Committee in February 1998. Each example illustrates a selection of requirements from ... For example, IAS 2, paragraph 36. All rights reserved. BCZ41-BCZ42), Future cash flows from internally generated goodwill and synergy with other assets (paras. Other refinements to the proposals in the standard in 2004 ( paras items would often necessitat… basis... Impaired ( paras not exhaustive by the international accounting standards Committee in 1998., measuring Recoverable amount and accounting for impairment ( paras for goodwill ( paras, interaction with IAS 12 paras. Illustrates a selection of requirements from... for example, IAS 2, paragraph 36 requirements being broader than intended... 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Improvements and restructurings are built into the management budgets tax cash flows ( paras in a!