If you navigate away from this document, the view date will reset. The chapter on impairment of assets and non-current assets held for sale covers: Impairment of assets (IAS 36) Examples of … BC192-BC204), The Board’s redeliberations (paras. IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . Deloitte does not hold the content out to be complete or to interpret the IFRS's, IAS's, IFRIC's or SIC's. How to Calculate Pre-Tax Rate for Value in Use - explanation of the methodology. 58-64), Cash-generating units and goodwill (paras. The project’s objective was to measure of value of ‘net’ economic benefits embedded in a fixed asset that can be unlocked in event of the sale of the asset BCZ85), Interaction with IAS 12 (paras. 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. Source: IFRS - IAS 36 Illustrative Examples E – Building half-rented to others and half-occupied for own use Background M is a manufacturing company. ... 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) 93-94A) Effective date (paras. Menu. IU 05-16]. IAS 36 seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. BC187-BC191), Disclosures for cash‑generating units containing goodwill or indefinite‑lived intangibles (paragraphs 134 and 135) (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 41 then deals with gains and losses, inability to measure fair value reliably, provides rules for government grants related to biological assets. Previous Section Next Section . IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . All rights reserved. BC90-BC94), Recognition of an impairment loss (paragraphs 58-64) (paras. IAS 36 — Impairment of Assets. You are here ... International Accounting Standards . 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 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. Inline XBRL; ZIP; Example 12: Consolidated and Separate Statements of Financial Position. In April 2001 the International Accounting Standards Board resolved that all Standards and Interpretations issued under previous Constitutions continued to be applicable unless IAS 36 — Impairment of Assets. BC229), History of the development of a standard on impairment of assets (paras. Assessing the useful lives of intangible assets. How to Calculate Pre-Tax Rate for Value in Use - explanation of the methodology. Contents. Copyright © 2020 Deloitte Development LLC. BCZ41-BCZ42), Future cash flows from internally generated goodwill and synergy with other assets (paras. BCZ86-BCZ89), Comments by field visit participants and respondents to the December 2002 Exposure Draft (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 The International Accounting Standards Board, as a consequential amendment to IFRS 13 'Fair Value Measurement', modified some of the disclosure requirements in IAS 36 'Impairment of Assets' regarding measurement of the recoverable amount of impaired assets. However, one of the amendments potentially resulted in the disclosure requirements being broader than originally intended. 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. 59-60) Use of provisions (paras. BC192-BC209), Background to the proposals in the Exposure Draft (paras. Practical tip: disposals When an asset is to be disposed of, its cash inflows will be independent of the cash inflows of other assets. BCZ40-BC80), Expected value approach (paras. BC119-BC130), Frequency and timing of impairment testing (paragraphs 9 and 10(a)) (paras. One factor specifically noted by IAS 36 as an external indicator of impairment is that the carrying amount of the net assets of the Contents. BC56-BC80), Consideration of future tax cash flows (paras. Terms defined in this Standard are in italics the first time they appear in the Standard. 53-58) Changes in provisions (paras. BCZ178-BCZ181), Reversing impairment losses for assets other than goodwill (paragraphs 110-123) (paras. IFRS 13 Fair Value Measurement amended all references to “fair value less costs to sell” in these examples with effect from 1 January 2013. Page 5 of 52. Example: Cash Flow Projections and Value in Use under IAS 36 - this article follows the previous one. OBJECTIVE IAS 36 prescribes the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amounts. The implementation guidance to IAS 1 contains illustrative examples of acceptable formats. These examples are based on illustrative examples from IAS 1. BCZ113-BC118), Internal transfer pricing (paragraph 70) (paras. History of amendments; Document overview; Tools; Set document view date. The amended standard and new standard are effective for periods beginning on or after 1 January 2017 and 1 January 2018, respectively. This appendix is an integral part of the Standard. Working Examples. measure of value of ‘net’ economic benefits embedded in a fixed asset that can be unlocked in event of the sale of the asset IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . 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 International Accounting Standards . Example 1 Company A operates a profitable bus route, bus route A. BC223-BC226), Early application (paragraph 140) (paras. Therefore, the asset should be assessed for impairment in its own right, rather than as part of a CGU. 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. the higher of fair value less costs of disposal and value in use). 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. You are here ... International Accounting Standards . 63-83) Disclosure (paras. The disclosures are primarily concerned with the assumptions and estimates used in determining VIU or FVLCD, whichever supports the recoverable amount. IU 05-16]. Viewpoint - Global. The examples illustrate accounting estimates with varying characteristics and degrees of complexity. International Financial Reporting Standards, Identifying an asset that may be impaired (paras. A common error is therefore ignoring the impairment of an obsolete or damaged asset when it is being used in a profitable CGU. Examples include financial assets such as receivables. Illustrative Example—Long-term Interests in Associates and Joint Ventures This example portrays a hypothetical situation illustrating how an entity (investor) accounts for long-term interests that, in substance, form part of the entity’s net investment in an associate (long-term interests) applying IFRS 9 and IAS 28 based on the assumptions Accordingly, this guide should not be used as a substitute for referring to the standards and other relevant interpretative guidance. Set a date to view the document . 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. Certain assets are not covered by the standard and these are generally those assets dealt with by other standards, for example, financial assets dealt with under IAS 39. 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. Appendix A. 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. BC209E-BC209Q), Transitional provisions (paragraphs 138-140) (paras. IFRS Manual of Accounting . BC205-BC209), Changes as a result of Improvements to IFRSs (2008) (para. IAS 36 also outlines the situations in which a company can reverse an impairment loss. BC228B-BC228C), Summary of main changes from the Exposure Draft (para. 7-17), Measuring recoverable amount (paras. Example 1 Identification of cash-generating units. Additional Historical Information Required for IAS 29 Restatement B.I Property, Plant and Equipment Property, plant and equipment is comprised of: (all amounts expressed in HCU) 2002 2003 Gross book value (GBV) 58,600 79,200 Accumulated depreciation (15,263) (25,037) Net book value (NBV) 43,337 54,163 84-92) Transitional provisions (paras. BC131-BC177), Allocating goodwill to cash‑generating units (paragraphs 80-87) (paras. Illustrative Example—Long-term Interests in Associates and Joint Ventures This example portrays a hypothetical situation illustrating how an entity (investor) accounts for long-term interests that, in substance, form part of the entity’s net investment in an associate (long-term interests) applying IFRS 9 and IAS 28 based on the assumptions 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. BCZ105-BCZ107), Revalued assets: recognition in the income statement versus directly in equity (paras. In addition, IFRS and its interpretation change over time. 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 ILLUSTRATIVE EXAMPLES FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS EDITION. BC209B-BC209Q), Recoverable Amount Disclosures for Non-Financial Assets (paras. 36.78 and the IFRS Interpretations Committee discussion [IAS 36.29, 78. IAS 34 Interim Financial Reporting was issued by the International Accounting Standards Committee in February 1998. BCZ14-BCZ20), Recoverable amount based on value in use (paras. Chapter 7 – Illustrative example of IAS 29 B. The implementation guidance to IAS 1 contains illustrative examples of acceptable formats. IFRS Manual of Accounting . 3. Illustrative Examples – IAS 36 Impairment of Assets . BC210-BC228C), Transitional impairment test for goodwill (paras. • the interaction between IAS 36 and other IFRSs. BCZ46-BCZ51), Discount rate (paragraphs 55-57 and A15-A21) (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.