For further resources on applying the requirements of IAS 36 and other IFRSs, please refer to BDO resources such as IFRS In Practice publications and online training, which are available on BDO’s IFRS Reporting Hub. the higher of fair value less costs of disposal and value in use). The entity must reduce the carrying amount of the asset to its recoverable amount, and recognise an impairment loss. Impairment is calculated as the expected loss over the next 12 months for the existing financial assets. FRS 109 which replaces FRS 39, includes guidance on (i) the classification and measurement of financial assets and financial liabilities; (ii) impairment requirements for financial assets; and (iii) general hedge accounting. Programme Outline Introduction SFRS For Small Entities . The COVID-19 outbreak brought significant impact on businesses and posed challenges to financial reporting, especially on the impairment assessment of non-financial assets. IAS 36, Impairment of Assets IFRS 9, Financial Instruments Goodwill; Intangible assets; debt instruments classified at fair value through Property, plant and equipment; Right-of-use assets; Associates and joint ventures accounted for under the equity method; Investment properties not measured at fair value; and Costs to obtain or fulfil a contract recognised in accordance with IFRS 15, … Subscribe to receive the latest BDO News and Insights. Right-Of-Use (ROU) assets are non-financial assets in the scope of IAS 36. This standard eliminates goodwill amortization, requiring instead that goodwill be evaluated for possible impairment. For further resources on applying the requirements of IAS 36 and other IFRSs, please refer to BDO resources such as IFRS In Practice publications and online training, which are available on BDO’s IFRS Reporting Hub . IAS 36 Impairment of Assets provides that goodwill impairment loss should be “allocated between the parent and the non-controlling interest on the same basis as that on which profit or loss is allocated” (paragraph C6).. IAS 36 also applies to groups of assets that do not generate cash flows individually (known as cash-generating units). In contrast under FRS 11 the impairment loss was set against intangibles first and then finally against other assets on a pro-rata basis. 2. With the exception of goodwill and certain intangible assets for which an annual impairment test is required, entities are required to conduct impairment tests where there is an indication of impairment of an … Heightened scrutiny. A: An unexpected fall in the market value of one or more assets. 20 Journal of Law and Financial Mangement - Volume 7, No.1 Khairi Under the new standards, there are three significant impacts on the treatment of goodwill. [IAS 38.111] Measurement subsequent to acquisition: intangible assets with indefinite useful lives. Accounting Standards . IFRS 16 and IAS 36. To gain a better understanding of the characteristics of the goodwill reporting regime, developing an understanding of the level of compliance and quality disclosures related to determining the recoverable amount of the CGUs are matters of … Although it … By using this site you agree to our use of cookies. Earlier … View S214 Impairment of Assets (Facilitator) - AY revised 2017 (V3).pptx from ACC MISC at National University of Singapore. Effective for annual periods beginning on or after 1 Jan 2017. An intangible asset with an indefinite useful life should not be amortised. Introduction ; Identifying assets that may be impaired; Identifying cash-generating units; Impairment assessment of goodwill; Measuring recoverable amount: ‘fair value less costs of … This workshop covers FRS 36 Impairment of Assets (including identifying indicators of impairment, understanding valuation approaches, applying commonly used valuation methods, preparing supportable forecasts and estimating an appropriate discount rate) and FRS 109 Financial Instruments (specifically the ECL impairment model). In this Standard, paragraphs with a prefix ‘IFRS’ refer to effective date, transition provisions and/or, other text that are extracted from IFRSs. • FRS 109 does not include a definition for “default”; instead, corporates need to define “default” in the context of their specific types of assets. The Standard also defines when an asset is impaired, how to recognize an impairment loss, when an entity should reverse this loss and what information related to impairment should be disclosed in the financial statements. IFRS 16 and IAS 36 how changes in lease accounting will impact your impairment testing processes. Unless it is tested on a standalone basis, an ROU asset is tested in combination with other assets in a Cash Generating Unit (CGU). If an asset's carrying value exceeds the amount that could be received through use or selling the asset, then the asset is impaired and the standard requires a company to make provision for the impairment loss. Practice Statements. This workshop covers FRS 36 Impairment of Assets (including identifying indicators of impairment, understanding valuation approaches, applying commonly used valuation methods, preparing supportable forecasts and estimating an appropriate discount rate) and FRS 109 Financial Instruments, specifically measuring impairment under the ECL model for trade receivables, contract assets and lease receivables. In recent years, manufacturers have developed their position to cope with the threats from low cost emerging countries and they now aspire to provide excellent service, supported by extensive R&D and innovation. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be reduced to its recoverable amount. 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