Yakub02
Banned
Estimates of future cash flows should be based on reasonable and supportable assumptions that represent management’s best estimate of the economic conditions that will exist over the remaining useful life of the asset.
The discount rate used should be the rate of return that the market would expect from an equally risky investment. However, both the expected future cash flows and the discount rate might be adjusted to allow for uncertainty about the future – such as the business risk associated with the asset and expectations of possible variations in the amount or timing of expected future cash benefits from using the asset
However, an impairment loss recognised in respect of an asset carried at a previously recognised revaluation surplus is recognised in other comprehensive income to the extent that it is covered by that surplus.
Thus it is treated in the same way as a downward revaluation, reducing the revaluation reserve balance relating to that asset in the statement of changes in equity. Impairment not covered by a previously recognised surplus on the same asset is recognised in profit or loss.
Impairment of an asset should be identified and accounted for as follows:
(1) At the end of each reporting period, the entity should assess whether there are any indications that an asset may be impaired.
(2) If there are such indications, the entity should estimate the asset’s recoverable amount.
(3) When the recoverable amount is less than the carrying value of the asset, the entity should reduce the asset’s carrying value to its recoverable amount. The amount by which the value of the asset is written down is an impairment loss
. (4) This impairment loss is recognised as a loss for the period.
The discount rate used should be the rate of return that the market would expect from an equally risky investment. However, both the expected future cash flows and the discount rate might be adjusted to allow for uncertainty about the future – such as the business risk associated with the asset and expectations of possible variations in the amount or timing of expected future cash benefits from using the asset
However, an impairment loss recognised in respect of an asset carried at a previously recognised revaluation surplus is recognised in other comprehensive income to the extent that it is covered by that surplus.
Thus it is treated in the same way as a downward revaluation, reducing the revaluation reserve balance relating to that asset in the statement of changes in equity. Impairment not covered by a previously recognised surplus on the same asset is recognised in profit or loss.
Impairment of an asset should be identified and accounted for as follows:
(1) At the end of each reporting period, the entity should assess whether there are any indications that an asset may be impaired.
(2) If there are such indications, the entity should estimate the asset’s recoverable amount.
(3) When the recoverable amount is less than the carrying value of the asset, the entity should reduce the asset’s carrying value to its recoverable amount. The amount by which the value of the asset is written down is an impairment loss
. (4) This impairment loss is recognised as a loss for the period.