SFRS(I) 1-36: Impairment of Assets

Flashcards covering the key concepts of SFRS(I) 1-36, including recognition, measurement, disclosures, and reversals of impairment losses.

What is the primary objective of SFRS (I) 1-36?

To ensure that assets are carried at no more than their recoverable amount.

When should an entity assess whether an asset may be impaired according to SFRS (I) 1-36?

End of each reporting period.

What are some indications of impairment, considering both external and internal sources of information?

Significant decline in value, changes in technology/market/economic/legal environment, obsolescence or physical damage.

What are the two components used to measure the recoverable amount of an asset?

Fair value less costs of disposal and Value in use.

How is 'Fair value less costs of disposal' defined under SFRS (I) 1-36?

Price to sell an asset in an orderly transaction between market participants at the measurement date, less incremental costs directly attributable to the disposal.

What does 'Value in use' represent in the context of impairment of assets?

Present value of the future cash flows expected to be derived from an asset or cash-generating unit.

What action should be taken when an asset's carrying amount is greater than its recoverable amount?

Recognize an impairment loss.

How is an impairment loss recognized if the asset was previously revalued?

Treat as revaluation decrease until revaluation reserve is zerorised. Then recognize in statement of profit or loss, or recognize directly in profit or loss if no previous revaluation.

What impact does the recognition of an impairment loss have on future depreciation charges?

The depreciation charge should be adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

What information should be disclosed regarding an impaired asset in the financial statements?

Events and circumstances leading to the loss, amount of the loss, nature of the asset, and whether recoverable amount is based on value in use or fair value less costs of disposal.

How is an impairment loss reversed according to SFRS (I) 1-36?

Increase the carrying amount to the recoverable amount, but not more than what the carrying amount would have been had no impairment loss been recognized; recognize the loss in SPL (except for goodwill).

Under what circumstances can an impairment loss be reversed?

When there is a change in the estimates used to determine the recoverable amount.