Impairment Models Long Lived Assets Intangibles and Goodwill PDF

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Description

Impairment Models - Long-Lived Assets and Limited Life Intangibles

Impairment Assessment Steps involved Impaired if Recoverable amount Impairment loss is Reversal permitted Journal entry (long-lived)

IFRSRational Entity Model Required each reporting date

ASPE Cost Recovery Model Required only when events suggest

One

Two

Carrying amount (CV) more than recoverable amount (RA) Higher of value in use (VIU) and (FV- costs of disposal)

Carrying amount (CV) more than recoverable amount (RA) Undiscounted net cash flows from using and disposal

CV- RA

CV- FV (discounted)

Yes, limited in amount

No

Dr. Impairment loss Cr. Accumulated impairment losses

Dr. impairment loss Cr. Accumulated impairment losses

Journal entry Dr. Impairment loss (Limited Life Cr. Intangible asset Intangibles)

Dr. Impairment loss Cr. Intangible asset

Value in use (VIU): present value of future cash flows from the asset’ use and disposal.

Impairment Models- Indefinite-Life Intangibles  IFRSRational Entity Model Impairment Assessment Steps involved Impaired if Recoverable amount Impairment loss is Reversal permitted Journal entry 

Required at lease annually One Carrying amount (CV) more than recoverable amount (RA) Higher of value in use (VIU) and (FV- costs of disposal)

ASPE FV Model Required only when events suggest One Carrying amount (CV) more than FV NA

CV- RA

CV- FV

Yes, limited in amount

No

Dr. impairment loss Cr. Intangible asset

Dr. impairment loss Cr. Intangible asset

Goodwill Impairment Models IFRS Impairment Assessment Steps involved

Impaired if

Recoverable amount

Impairment loss is

ASPE

Required each reporting date

Required only when events suggest

One

Two + one

Carrying amount (CV) of the CGU (including goodwill) more than recoverable amount (RA)

Step1: Carrying amount (CV) of the reporting unit more than FV; Step 2: carrying value of goodwill more than (implied) FV of goodwill

Higher of value in use (VIU) and (FV- costs of disposal) Impairment loss is allocated first to goodwill, then remainder to other assets on a relative carrying amount basis (proportionate amount).

(implied) FV of goodwill Difference between the carrying value of goodwill and (implied) FV of goodwill

Reversal permitted

No

No

Journal entry

Dr. Impairment loss Cr. Goodwill

Dr. Impairment loss Cr. Goodwill

Value in use: present value of future cash flows from the asset’ use and disposal. CGU: cash generating unit ...