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The impairment loss of the asset?

The following data on a long-term asset in thousands31/12/2013; - Historical cost800$ - Accumulated depreciation200$ - Net cash flows (undiscounted) expected from its use, including the Expected price for the sale as scrap650$ - Fair value525$ The impairment loss of the asset; a)150 $ b)75 $ c)275 $ d) Zero

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Question ajoutée par Rashad Moursi , Finance Director & Business Development, International Business Transformer Owners Repr. - Hotels , Investment and financial
Date de publication: 2014/05/15
Syed Faraz Baqar
par Syed Faraz Baqar , Procurement Lead , Agthia Group PJSC

This is a vague question.

 

Impairment loss is the amount by which the CARRYING AMOUNT OF AN ASSET EXCEEDS ITS RECOVERABLE AMOUNT.

 

Here, The carrying amount is $600

 

Recoverable amount is the HIGHER of,

a. FV less cost to sell,

b. Present value of Value in use including any value fetched on sale

 

Now this present value as mentioned in (b) may be achieved by discounting $650 at the rate of discount over the years of inflow.

If the discounted cash flows are over $525, than value in use should be the recoverable amount. In which situation it shall be (the amount of value in use) compared with carrying amount. If the carrying amount is found lower, no impairment would be charged. However if carrying amount is found greator, than impairment shall be charged to the difference of discounted value in use and carrying amount.

 

However, if the discounted value in use is lower than fair value, than fair value shall be the recoverable amount in which condition an impairment of $75 shall be charged.

Shamim Khan Dawar
par Shamim Khan Dawar , Group Finance Manager , JAWAHR | Jawa Logistics | Orient Trading(OMATRA)

Impairment loss: the amount by which the carrying amount of an asset exceeds its recoverable amount

Carrying amount: the amount at which an asset is recognised in the balance sheet after deducting accumulated depreciation and accumulated impairment losses.

Recoverable amount: the higher of an asset's fair value less costs of disposal and its value in use.

So in this situation the impairment loss will be zero.

Samir Mahmoud
par Samir Mahmoud , مدير حسابات , Elshrouk Free zone co

b)75 $ 

Basel Al Bader, CMA, CFM
par Basel Al Bader, CMA, CFM , Internal Audit Senior Manager , Kuwait Telecommunication Company- VIVA

 

 

 

 

 

Giving that the calculation of the Net cash flow was not discounted then we cannot consider it as the “Value in use” according to IAS36, IF the only value which can be measured reliably  to compare is the fair value,  the impairment loss will be the carrying amount600 (800-200) less fair value525 =75 $ (answer B)    

 

 

 

 

Utilisateur supprimé
par Utilisateur supprimé

ZERO

since the asset being sold as scrap for more than the carrying amount.

Ravi Chhantel
par Ravi Chhantel , Assistant Finance Manager , Tiger Palace Resort

impairment is nil.

Venu Gopal Malapati
par Venu Gopal Malapati , Assistant Finance Manager , Foulath Group

Answer : D. No Impairment

Asad zaman
par Asad zaman , Audit/Finance , Rafaqat Baber and co

impairment occur when CV of asset > recovarable amount

while recovarable amount is heigher of Fair value less cost to sell or value in use

so value in use is heigher which is650 we will comapre it CV which is800-200=600 ..

so impairmentloss is zeroooo

Akram Massoud
par Akram Massoud , FINANCE MANAGER , Autoexcellence LTD

DescriptionAmount 

Historical cost800

Accumulated depreciation-200

Net PP&E600

Fair value525

impairment loss of the asset = -75

 

Abubakar Abubakar
par Abubakar Abubakar , MANAGING PARTNER , ZIB CONSULTANTS (ZIBCO)

The fair value in the case of impairment must be discounted. In that case i can opt for75

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