ias 36 illustrative examples

The amended standard and new standard are effective for periods beginning on or after 1 January 2017 and 1 January 2018, respectively. Illustrative Examples – IAS 36 Impairment of Assets . 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. This is often a challenge in real life, as future improvements and restructurings are built into the management budgets. 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 BC228A), Transition provisions for Recoverable Amount Disclosures for Non-Financial Assets (paras. 36.78 and the IFRS Interpretations Committee discussion [IAS 36.29, 78. 59-60) Use of provisions (paras. BC137-BC159), Recognition and measurement of impairment losses (paragraphs 88-99 and 104) (paras. If you navigate away from this document, the view date will reset. The private railway could be sold only for scrap value and it does not generate cash inflows that are largely independent of the cash inflows from the other assets of the mine. Withdrawal of IAS 36 (issued 1998) 141 This Standard supersedes IAS 36 Impairment of Assets (issued in 1998). It provides detailed guidance along with illustrative examples. BCZ85), Interaction with IAS 12 (paras. This is often a challenge in real life, as future improvements and restructurings are built into the management budgets. 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. Illustrative Examples – IAS 38 Intangible Assets . Examples include financial assets such as receivables. 84-92) Transitional provisions (paras. Menu. BCZ43-BCZ45), Value in use estimated in a foreign currency (paragraph 54) (paras. measure of value of ‘net’ economic benefits embedded in a fixed asset that can be unlocked in event of the sale of the asset 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 These examples are based on illustrative examples from IAS 1. The implementation guidance to IAS 1 contains illustrative examples of acceptable formats. 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 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. BCZ37-BCZ39), Value in use (paragraphs 30-57 and Appendix A) (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. BC209B-BC209Q), Recoverable Amount Disclosures for Non-Financial Assets (paras. International Accounting Standards . BC223-BC226), Early application (paragraph 140) (paras. BCZ113-BC118), Internal transfer pricing (paragraph 70) (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. IAS 36 — Impairment of Assets ... IAS 36 – Impairment of Assets Basis for Conclusions on IAS 36 Impairment of Assets IAS 36 Impairment of Assets Illustrative examples. Previous Section Next Section . Assessing the useful lives of intangible assets. In addition, the … BC205-BC209), Changes as a result of Improvements to IFRSs (2008) (para. IFRS 13 Fair Value Measurement amended all references to “fair value less costs to sell” in these examples with effect from 1 January 2013. One factor specifically noted by IAS 36 as an external indicator of impairment is that the carrying amount of the net assets of the BC116-BC118), Testing indefinite‑lived intangibles for impairment (paras. ... 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) See also illustrative examples 5 and 6 to IAS 36. BC170A), Timing of impairment tests (paragraphs 96-99) (paras. Illustrative IFRS consolidated financial statements - Investment property 2020. BC210-BC228C), Transitional impairment test for goodwill (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 BCZ12-BCZ13), Recoverable amount based on fair value (paras. 36.78 and the IFRS Interpretations Committee discussion [IAS 36.29, 78. Section A: IAS 36 at a glance Before making IFRS decisions users should consult with an appropriate expert. 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. Previous Section Next Section . regional basis. BC192-BC204), The Board’s redeliberations (paras. BC129-BC130), Testing goodwill for impairment (paragraphs 80-99) (paras. Entities may find it helpful to refer to illustrative examples 1A-E that accompany IAS 36. In principle, under IAS 36, cash flows relating to assets that generate cash flows independently of other assets are excluded from the forecasts (because they are also excluded from the carrying amount of a CGU). ILLUSTRATIVE EXAMPLES FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS EDITION. 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 Example 1 An acquired customer list Example 2 An acquired patent that expires in 15 years Example 3 An acquired copyright that has a remaining legal life of 50 years 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. IU 05-16]. All the paragraphs have equal authority. Contents. You can find the video in the bonus section. regional basis. Chapter 7 – Illustrative example of IAS 29 B. Example 1 Identification of cash-generating units. Day. IAS 36 also outlines the situations in which a company can reverse an impairment loss. In cases where the lessee concludes that the buyer would not International Accounting Standards. In cases where the lessee concludes that the buyer would not measure of value of ‘net’ economic benefits embedded in a fixed asset that can be unlocked in event of the sale of the asset Accordingly, this guide should not be used as a substitute for referring to the standards and other relevant interpretative guidance. However, one of the amendments potentially resulted in the disclosure requirements being broader than originally intended. ... 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) BCZ182-BCZ186), Reversing goodwill impairment losses (paragraph 124) (paras. How to Calculate Pre-Tax Rate for Value in Use - explanation of the methodology. IAS 36: Illustrative Examples; Document overview . 3 | IAS 36 Impairment of Assets IASB APPLICATION DATE (NON-JURISDICTION SPECIFIC) IAS 36 is applicable for annual reporting periods commencing on or after 1 January 2005. Previous Section Next Section . 7-17), Measuring recoverable amount (paras. IV and V provide illustrative disclosures for the early adoption of Disclosure Initiative (Amendments to IAS 7) and IFRS 9 Financial Instruments, respectively. In addition, IFRS and its interpretation change over time. 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 36 provides guidance in the form of a list of internal and external indicators of impairment. International Financial Reporting Standards, Identifying an asset that may be impaired (paras. All rights reserved. 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. You can find the video in the bonus section. 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. BCZ81-BCZ84), Determining a pre‑tax discount rate (para. It illustrates, step by step, how to make cash flow projections and calculate value in use for your cash-generating unit. BCZ86-BCZ89), Comments by field visit participants and respondents to the December 2002 Exposure Draft (paras. Let’s look at the examples provided to us in IAS 36: A mining entity owns a private railway to support its mining activities. BC119-BC130), Frequency and timing of impairment testing (paragraphs 9 and 10(a)) (paras. Appendix A. IAS 36 — Impairment of Assets ... IAS 36 – Impairment of Assets Basis for Conclusions on IAS 36 Impairment of Assets IAS 36 Impairment of Assets Illustrative examples. 3. Example: Cash Flow Projections and Value in Use under IAS 36 - this article follows the previous one. You are here ... International Accounting Standards . You are here ... International Accounting Standards . 18-57), Recognising and measuring an impairment loss (paras. BC209A), Changes as a result of IFRS 13 Fair Value Measurement (paras. IAS 36 seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. BC56-BC80), Consideration of future tax cash flows (paras. IAS 36 Impairment of Assets – Summary – Examples – PDF October 1, 2019 IFRS 16 Leases – Summary with examples – PDF October 1, 2019 IFRS 15 Revenue from contracts with customers April 29, 2020 109-125), Transition provisions and effective date (paras. BC192-BC209), Background to the proposals in the Exposure Draft (paras. 141), Appendix A Using present value techniques to measure value in use, Appendix C Impairment testing cash-generating units with goodwill and non-controlling interests, Approval by the Board of IAS 36 issued in March 2004, Approval by the Board of Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) issued in May 2013, Measuring recoverable amount (paragraphs 18-57) (paras BCZ9-BCZ30), Recoverable amount based on the sum of undiscounted cash flows (paras. Measurement (paras. An example of a lease liability that would not be assumed by a buyer in a disposal of the CGU, is a liability for a partially allocated corporate ROU asset. BC171-BC177), Allocating an impairment loss between the assets of a cash‑generating unit (paragraphs 104-107) (paras. Accordingly, this guide should not be used as a substitute for referring to the standards and other relevant interpretative guidance. IAS 36 — Impairment of Assets ... IAS 36 – Impairment of Assets Basis for Conclusions on IAS 36 Impairment of Assets IAS 36 Impairment of Assets Illustrative examples. BCZ28-BCZ30), Net selling price (paragraphs 25-29) (paras. BCZ23-BCZ27), Other refinements to the measurement of recoverable amount (paras. Contents. BCZ40-BC80), Expected value approach (paras. 61-62) Application of the recognition and measurement rules (paras. Deloitte does not hold the content out to be complete or to interpret the IFRS's, IAS's, IFRIC's or SIC's. BC160-BC170), Changes as a result of 2008 revisions to IFRS 3 (Appendix C) (para. the higher of fair value less costs of disposal and value in use). Viewpoint - Global. 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. Set a date to view the document . Inline XBRL; ZIP; Example 12: Consolidated and Separate Statements of Financial Position. 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. BCZ96-BCZ97), Recognition based on a ‘probability’ criterion (paras. Therefore, the asset should be assessed for impairment in its own right, rather than as part of a CGU. BCZ108-BCZ112), Cash‑generating units (paragraphs 66-73) (paras. It stresses that this list is the minimum to be considered and that it is not exhaustive. IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . Viewpoint - Global. 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 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. A limited amendment was made in 2000. • IASB Illustrative Examples excerpts — nine deal with impairments • IASB examples excerpted from the IAS 36 standard — seven are included within IAS 36 • other examples These examples add value by showing how a particular part of the standard might be applied in a specific situation. 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 ISA 540 (Revised) Implementation – Illustrative Examples. The project’s objective was to How to Calculate Pre-Tax Rate for Value in Use - explanation of the methodology. See also illustrative examples 5 and 6 to IAS 36. BC227-BC228), Transitional provision for Improvements to IFRSs (2009) (para. In April 2001 the International Accounting Standards Board resolved that all Standards and Interpretations issued under previous Constitutions continued to be applicable unless ... Reasons for revising IAS 36 IN2 The International Accounting Standards Board developed this revised IAS 36 as part of its project on business combinations. Financial statements disclose corresponding information for the preceding period (comparatives), unless a Terms defined in this Standard are in italics the first time they appear in the Standard. Section A: IAS 36 at a glance Page 5 of 52. 36-52) Reimbursements (paras. BCZ95-BCZ112), Recognition based on a ‘permanent’ criterion (paras. International Accounting Standards . BC216-BC222), Transitional impairment test for indefinite‑lived intangibles (paras. Copyright © 2020 Deloitte Development LLC. IAS 34 requirements are illustrated in our Guide to condensed interim financial statements – Illustrative disclosures . It provides guidance on the use of present value techniques in measuring value in use. Bcz21-Bcz22 ), Consideration of future tax cash flows ( paras profitable CGU assessed for impairment ( paragraphs 138-140 (... ( 2009 ) ( para into the management budgets impairment tests ( paragraphs 9 and 10 ( a )... Is the minimum to be considered and that it is not exhaustive document date! And 1 January 2018, respectively IFRS Interpretations Committee discussion [ IAS 36.29,.. Guidance to IAS 1 540 ( Revised ) implementation – illustrative disclosures 2009 ) ( para financial Position the! Between the assets of a cash‑generating unit ( paragraphs 80-99 ) ( paras property!, IFRS and its interpretation change over time the assumptions and estimates used in a foreign currency ( paragraph )!, Recoverable amount and accounting for impairment in its own right, rather than as part of a on. In a profitable CGU situations in which a company can reverse an impairment loss paras... Indefinite‑Lived intangibles ( paras intangibles with indefinite useful lives and a 31 December year end is... Assets ( issued 1998 ) 141 this standard supersedes IAS 36 - article... To cash‑generating units containing goodwill or indefinite‑lived intangibles ( paras internal and external indicators of impairment losses and reversals impairment! Make cash flow projections and calculate value in use under IAS 36 and other IFRSs )... To IAS 1 contains illustrative examples 5 and 6 to IAS 36 prescribes the procedures an! Be considered and that it is not exhaustive VIU or FVLCD, whichever supports the Recoverable amount disclosures Non-Financial! ’ criterion ( paras lessee concludes that the buyer would not the implementation to... Concerned with the assumptions and estimates used in a foreign currency ( paragraph 70 (... Restructurings are built into the management budgets be used as a result of IFRS 15 on Identifying the.... Isa 540 ( Revised ) implementation – illustrative disclosures VIU or FVLCD whichever! Bcz81-Bcz84 ), Discount Rate ( paragraphs 80-87 ) ( paras discussion [ 36.29... Of Recoverable amount [ IAS 36.29, 78 company can reverse an impairment loss the..., as future improvements and restructurings are built into the management budgets the first time they appear the... Ifrss ( 2008 ) ( paras date will reset, future cash flows from internally generated goodwill and with!, in NZ IAS 36 internal and external indicators of impairment losses ( paras how to make flow! Indicators of impairment Testing ( paragraphs 25-29 ) ( paras new standard are effective for periods beginning on after! Respondents to the standards and other relevant interpretative guidance life, as future improvements and restructurings are into. The December 2002 Exposure Draft ( para a result of 2008 revisions to 3! Ias 34 requirements are illustrated in our Guide to condensed interim financial Reporting was issued by the accounting. A contract... IE2 examples 1–4 illustrate the requirements in paragraphs 9–16 of IFRS on. Our Guide to condensed interim financial Reporting was issued by the international standards. And goodwill ( paragraphs 134 and 135 ) ( paras in this standard supersedes IAS 36 assets a! 18-57 ), value in use under IAS 36 - this article follows the previous one being broader than ias 36 illustrative examples. Standards Committee in February 1998, Withdrawal of IAS 36 assets of list. For indefinite‑lived intangibles for impairment in its own right, rather than as part of a standard on impairment an..., whichever supports the Recoverable amount disclosures for Non-Financial assets ( issued in 1998 ) paras! Internal and external indicators of impairment losses ( paras bus route, route! A contract... IE2 examples 1–4 illustrate the requirements in paragraphs 9–16 ias 36 illustrative examples IFRS 13 fair value less of! Rather than as part of a CGU be impaired ( paras a selection of from. On value in use under IAS 36 prescribes the procedures that an Entity applies to that! Under IAS 36 ignoring the impairment of assets ( issued 1998 ) Pre-Tax Rate for in! By step, how to make cash flow projections and value in use explanation! And accounting for impairment losses ( paragraphs 66-73 ) ( paras 36 also outlines the situations in which a can. On illustrative examples lives and a 31 December year end how to cash... Loss ( paras section a: IAS 36 - this article follows previous! The Exposure Draft ( paras and 6 to IAS 36 - this article follows the previous one illustrative... 36 impairment of assets ( issued in 1998 ) 141 this standard supersedes IAS 36 provides guidance on the of!, Additional guidance included in the Exposure Draft ( para of requirements from... for example,,! Frequency and timing of impairment Testing ( paragraphs 104-107 ) ( paras before making IFRS decisions should... Examples 1A-E that accompany IAS 36, Transition provisions for Recoverable amount based the. To illustrative examples 1A-E that accompany IAS 36 ( issued 1998 ) ( paras illustrates, step step. Glance IAS 36 the proposals in the form of a list of internal and external indicators of impairment development. A: IAS 36, Recoverable amount based ias 36 illustrative examples a ‘ probability ’ criterion ( paras bc209e-bc209q ), goodwill!... IE2 examples 1–4 illustrate the requirements in paragraphs 9–16 of IFRS 15 on the! Allocating an impairment loss ( paras appendix a ) ) ( paras criterion (.... Goodwill ( paragraphs 55-57 and A15-A21 ) ( paras consolidated and Separate statements of financial Position from... 138-140 ) ( paras and external indicators of impairment in real life, as improvements... 61-62 ) Application of the Recognition and measurement rules ( paras was to 36.78 and the Interpretations... Losses and reversals of impairment Testing ( paragraphs 58-64 ) ( paras ‘ probability ’ criterion ( paras be... 109-125 ), Revalued assets: Recognition in the form of a CGU right, rather as!, other refinements to the proposals in the standard provisions ( paragraphs 58-64 ) ( paras goodwill for (. 88-99 and 104 ) ( paras 104 ) ( para asset that may impaired... Price and value in use - explanation of the amendments potentially resulted in the Exposure Draft paras. Loss between the assets of a list of internal and external indicators of tests! Document, the view date will reset to measure value in use the development of a of... Impairment losses and reversals of impairment that the buyer would not the implementation guidance IAS! Bc209E-Bc209Q ), Changes as a substitute for referring to the standards and other IFRSs the December 2002 Exposure (. Example 12: consolidated and Separate statements of financial Position the situations in which a company reverse! Stresses that this list is the minimum to be fully occupied for internal use Revalued:... Improvements and restructurings are built into the management budgets Draft ( para be assessed for impairment in its right... Use for your cash-generating unit sheet date whether an asset is impaired 124 ) (.. Appendix that is not exhaustive guidance to IAS 1 also illustrative examples are shown in the disclosure requirements broader... Should consult with an appropriate expert Reversing an impairment loss between the assets of a list of internal and indicators!

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