IFRS Standard: IAS 36 Impairment of assets

The objective of this Standard is to prescribe the procedures that an entity
applies to ensure that its assets are carried at no more than their recoverable
amount. An asset is carried at more than its recoverable amount if its carrying
amount exceeds the amount to be recovered through use or sale of the asset. If
this is the case, the asset is described as impaired and the Standard requires the
entity to recognise an impairment loss. The Standard also specifies when an
entity should reverse an impairment loss and prescribes dis

IAS 36 Objective Scope Definitions

Objective

1 The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this

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IAS 36 Identify an impaired asset

Identifying an asset that may be impaired

7 Paragraphs 8–17 specify when recoverable amount shall be determined. These requirements use the term ‘an asset’ but apply equally to an individual asset or a cash-generating unit. The remainder of this Standard is structured as follows:

  1. paragraphs 18–57 set out the requirements for measuring recoverable amount. These requirements also use the
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IAS 36 Measuring recoverable amount

18 This Standard defines recoverable amount as the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use. Paragraphs 19–57 set out the requirements for measuring recoverable amount. These requirements use the term ‘an asset’ but apply equally to an individual asset or a cash-generating unit.

19 It is

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IAS 36 Recognising and measuring an impairment loss

58 Paragraphs 59–64 set out the requirements for recognising and measuring impairment losses for an individual asset other than goodwill. Recognising and measuring impairment losses for cash-generating units and goodwill are dealt with in paragraphs 65–108.

59 If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of

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IAS 36 Cash-generating units and goodwill

65 Paragraphs 66–108 and Appendix C set out the requirements for identifying the cash-generating unit to which an asset belongs and determining the carrying amount of, and recognising impairment losses for, cash-generating units and goodwill.

Identifying the cash-generating unit to which an asset belongs

66 If there is any indication that an asset may be impaired, recoverable amount

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IAS 36 Reversing an impairment loss

109 Paragraphs 110–116 set out the requirements for reversing an impairment loss recognised for an asset or a cash-generating unit in prior periods. These requirements use the term ‘an asset’ but apply equally to an individual asset or a cash-generating unit. Additional requirements for an individual asset are set out in paragraphs 117–121, for a cash-generating unit in paragraphs

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IAS 36 Disclosure

126 An entity shall disclose the following for each class of assets:

  1. the amount of impairment losses recognised in profit or loss during the period and the line item(s) of the statement of comprehensive income in which those impairment losses are included.
  2. the amount of reversals of impairment losses recognised in profit or loss during the period and the line
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IAS 36 App A Present value as Value in use

Appendix A

Using present value techniques to measure value in use

This appendix is an integral part of the Standard. It provides guidance on the use of present value techniques in measuring value in use. Although the guidance uses the term ‘asset’, it equally applies to a group of assets forming a cash-generating unit.

The components of a present

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IAS 36 App C Impairment testing CGU Goodwill NCI

Appendix C

Impairment testing cash-generating units with goodwill and non-controlling interests

This appendix is an integral part of the Standard.

C1 In accordance with IFRS 3 (as revised in 2008), the acquirer measures and recognises goodwill as of the acquisition date as the excess of (a) over (b) below:

  1. the aggregate of:
    1. the consideration transferred measured in accordance with
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IAS 36IE Identification of cash-generating units

Illustrative examples

These examples accompany, but are not part of, IAS 36. All the examples assume that the entities concerned have no transactions other than those described. In the examples monetary amounts are denominated in ‘currency units (CU)’.

Example 1 Identification of cash-generating units

The purpose of this example is:

  1. to indicate how cash-generating units are identified in
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