IAS 36 Impairment

Question 1

What is the objective of IAS 36?

Answer 1

It is to provide procedures that an entity should follow to ensure that it’s assets, tangible or intangible,are not overstated.

Question 2

Which assets are eclipsed from IAS 36?

Answer 2

1. Inventories
2. Construction contracts
3. Differed tax assets
4. Employee benefits
5. Investment property carried at FV

Question 3

What is Carrying Amount (CA)

Answer 3

Is the amount an asset is recognised at in the statement of financial position minus accumulated depreciation- amortisation- accumulated impairment losses.

Question 4

What is Recoverable Amount (RA)

Answer 4

It is the higher of an assets fair value (FV) minus costs of disposal vs. Value in use.

Question 5

FV (fair value)

Answer 5

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 measurement date (refer to IFRS 13)

Question 6

Costs of disposal

Answer 6

Are direct additional costs that may be linked to the assets disposal.

Question 7

Value in use

Answer 7

Is the present value of future cash flows expected to be derived from an asset, including both those derived from the continued use of the asset and the eventual disposal of that asset at the end of its useful life.

Question 8

Discount rate

Answer 8

Is the current pre-tax (amount exclusive of tax) market rate