Chapter 31 - Impairment

Question 1

When do you test for impairment under IFRS or ASPE

Answer 1

Under IFRS, you test for impairment every year or when there are indicators. Under ASPE you test for impairment only when there are indicators.

Question 2

When do you test for impairment for goodwill

Answer 2

You test impairment for goodwill every year

Question 3

How to measure recoverable amount under IFRS

Answer 3

Recoverable amount is the higher of either:
1. FV-cost of disposal
2. Value in use in future (estimated future cash flows from continuing use or disposal)

Question 4

How to measure impairment loss amount under IFRS

Answer 4

Recoverable amount - Carrying value (cost-depreciation)

Question 5

What is the journal entry to record impairment loss

Answer 5

DR. Impairment Loss
CR. Accumulated impairment loss - (Asset)

Question 6

What is the rule for impairment loss (what is the maximum you can record an impairment loss)

Answer 6

1. If your recoverable amount is HIGHER than your carrying amount, there is no impairment loss.
2. You cannot record an impairment loss that is higher than your recoverable amount (The higher of: FV - cost to sell, or value in use)

Question 7

What is the rule for reversal of impairment loss?

Answer 7

You cannot reverse an impairment loss more than what the NBV/Carrying value was BEFORE you initially recorded impairment.

Question 8

DO QUESTION 31.1D EXAMPLE (RECOVERY OF IMPAIRMENT LOSS)

Answer 8

RAWR

Question 9

How do you treat impairment loss for goodwill

Answer 9

calculations are the same, you first allocate impairment loss to goodwill, and then the rest to the other assets if there is a CGU

Question 10

How do you measure recoverable amount under ASPE

Answer 10

Recoverable amount under ASPE is equal to undiscounted net cash flows

Question 11

How do you calculate recoverable amount unter ASPE

Answer 11

Fair value - carrying amount