International financial reporting standards, IFRS 36
Impairment of assets is discussed in the International Financial Reporting Standards 36 which is issued at 2004. The main goal of this principle is to mention re techniques that a company implements to make sure that carrying amount of assets is not more than recoverable amount of its assets. When the carrying amount of assets is exceeded the recoverable amount of assets, the company is required to identify the impairment losses. When the recoverable amount of asset is less than carrying amount of assets, the process of recognizing the impairment loss should be done. International Financial Reporting Standards 36 is an important standard for checking the accurate carrying amount of assets (IAS 36, 2009).
First of all, the company is required to examine the assets after completion of financial year. The company checks whether there is a sign that a property can be damaged. If a company finds any sign that assets can be impaired, the company evaluates the recoverable cost of property. The company will:
The company is not required to evaluate both the fair value as well as worth in use. If the fair value or worth in use are higher that carrying amount of the assets, then asset is not damaged. The assets are impaired when the carrying value exceeds the fair value or value in utilization.
After estimating the recoverable cost, the company is required to identify as well as calculate loss of impairment. When the carrying cost of asset is higher than the fair value or value in use, the carrying cost of the property will be deducted to its recovery cost (IAS 36, 2009). This deduction is known as loss of impairment. The loss of impairment will be identified quickly in the income statement, until the property is used at reappraise cost according to International Accounting Standard 16. To assess the impairment, the goodwill achieved in a company will be assigned to every achiever’s cash making units, or collections of cash making units, that is anticipated to advantage from the interactions of the collection of elements. This test can be conducted at any time in the year. The impairment loss is identified in the income statement, while impairment asset is recognized in the statement of financial position.
Impairment of assets is discussed in the International Financial Reporting Standards 36 which is issued at 2004. The main goal of this principle is to mention re techniques that a company implements to make sure that carrying amount of assets is not more than recoverable amount of its assets. When the carrying amount of assets is exceeded the recoverable amount of assets, the company is required to identify the impairment losses. When the recoverable amount of asset is less than carrying amount of assets, the process of recognizing the impairment loss should be done. International Financial Reporting Standards 36 is an important standard for checking the accurate carrying amount of assets (IAS 36, 2009).
First of all, the company is required to examine the assets after completion of financial year. The company checks whether there is a sign that a property can be damaged. If a company finds any sign that assets can be impaired, the company evaluates the recoverable cost of property. The company will:
The company is not required to evaluate both the fair value as well as worth in use. If the fair value or worth in use are higher that carrying amount of the assets, then asset is not damaged. The assets are impaired when the carrying value exceeds the fair value or value in utilization.
After estimating the recoverable cost, the company is required to identify as well as calculate loss of impairment. When the carrying cost of asset is higher than the fair value or value in use, the carrying cost of the property will be deducted to its recovery cost (IAS 36, 2009). This deduction is known as loss of impairment. The loss of impairment will be identified quickly in the income statement, until the property is used at reappraise cost according to International Accounting Standard 16. To assess the impairment, the goodwill achieved in a company will be assigned to every achiever’s cash making units, or collections of cash making units, that is anticipated to advantage from the interactions of the collection of elements. This test can be conducted at any time in the year. The impairment loss is identified in the income statement, while impairment asset is recognized in the statement of financial position. (Continued...) Wordcount of report: 1500 Words
First of all, the company is required to examine the assets after completion of financial year. The company checks whether there is a sign that a property can be damaged. If a company finds any sign that assets can be impaired, the company evaluates the recoverable cost of property. The company will:
- Assess the carrying amount of assets and recoverable amount of assets according to the number of years the assets can be used
- Examine the goodwill according to rules and regulations mentioned in 80 to 99 paragraph of International Financial Reporting Standards 36
The company is not required to evaluate both the fair value as well as worth in use. If the fair value or worth in use are higher that carrying amount of the assets, then asset is not damaged. The assets are impaired when the carrying value exceeds the fair value or value in utilization.
After estimating the recoverable cost, the company is required to identify as well as calculate loss of impairment. When the carrying cost of asset is higher than the fair value or value in use, the carrying cost of the property will be deducted to its recovery cost (IAS 36, 2009). This deduction is known as loss of impairment. The loss of impairment will be identified quickly in the income statement, until the property is used at reappraise cost according to International Accounting Standard 16. To assess the impairment, the goodwill achieved in a company will be assigned to every achiever’s cash making units, or collections of cash making units, that is anticipated to advantage from the interactions of the collection of elements. This test can be conducted at any time in the year. The impairment loss is identified in the income statement, while impairment asset is recognized in the statement of financial position.
Impairment of assets is discussed in the International Financial Reporting Standards 36 which is issued at 2004. The main goal of this principle is to mention re techniques that a company implements to make sure that carrying amount of assets is not more than recoverable amount of its assets. When the carrying amount of assets is exceeded the recoverable amount of assets, the company is required to identify the impairment losses. When the recoverable amount of asset is less than carrying amount of assets, the process of recognizing the impairment loss should be done. International Financial Reporting Standards 36 is an important standard for checking the accurate carrying amount of assets (IAS 36, 2009).
First of all, the company is required to examine the assets after completion of financial year. The company checks whether there is a sign that a property can be damaged. If a company finds any sign that assets can be impaired, the company evaluates the recoverable cost of property. The company will:
- Assess the carrying amount of assets and recoverable amount of assets according to the number of years the assets can be used
- Examine the goodwill according to rules and regulations mentioned in 80 to 99 paragraph of International Financial Reporting Standards 36
The company is not required to evaluate both the fair value as well as worth in use. If the fair value or worth in use are higher that carrying amount of the assets, then asset is not damaged. The assets are impaired when the carrying value exceeds the fair value or value in utilization.
After estimating the recoverable cost, the company is required to identify as well as calculate loss of impairment. When the carrying cost of asset is higher than the fair value or value in use, the carrying cost of the property will be deducted to its recovery cost (IAS 36, 2009). This deduction is known as loss of impairment. The loss of impairment will be identified quickly in the income statement, until the property is used at reappraise cost according to International Accounting Standard 16. To assess the impairment, the goodwill achieved in a company will be assigned to every achiever’s cash making units, or collections of cash making units, that is anticipated to advantage from the interactions of the collection of elements. This test can be conducted at any time in the year. The impairment loss is identified in the income statement, while impairment asset is recognized in the statement of financial position. (Continued...) Wordcount of report: 1500 Words
Introduction
Advantages and disadvantages of IFRS 36 for Investors
Advantages
Timely and accurate information
Managerial capabilities
Additional information in the monetary statements as compared to historical cost
Indications of business failures
Disadvantages
Difficulties
Allocation of goodwill
Limited information
Enhanced impairment charges
References
Advantages and disadvantages of IFRS 36 for Investors
Advantages
Timely and accurate information
Managerial capabilities
Additional information in the monetary statements as compared to historical cost
Indications of business failures
Disadvantages
Difficulties
Allocation of goodwill
Limited information
Enhanced impairment charges
References
