IFRS - Are we goo to go - IAS 36 - W3

IAS 36 Impairment of Assets suggests how indications of impairment might be recognised. Which TWO of the following would be EXTERNAL INDICATORS that one or more of an entity's assets may be impaired?

(i) An unusually significant fall in the market value of one or more assets

(ii) Evidence of obsolescence of one or more assets

(iii) An decline in the economic performance of one or more assets

(iv) An increase in market interest rates used to calculate value in use of the assets

• (i) and (ii)

• (i) and (iv)

• (iii) and (iv)

• (ii) and (iv)

Net asset of Cash generating unit ("CGU")

Property, plant and equipment: $260,000

Goodwill: $60,000

Intangible fixed assets: $30,000

Net current assets: $30,000

As a result of adverse publicity, Fyngle has a recoverable amount of only $270,000.

What would be the value of property, plant and equipment after the allocation of the impairment loss?

• $154,545

• $215,172

• $160,000

• $133,333

Company A acquired a non-current asset on 1 October 20W9 (ie ten years before 20X9) at a cost of $100,000 which had a useful life of ten years and a nil residual value. The asset had been correctly depreciated up to 30 September 20X4. At that date the asset was damaged and an impairment review was performed. On 30 September 20X4, the fair value of the asset less costs of disposal was $30,000 and the expected future cash flows were $8,500 per annum for the next five years. The current cost of capital is 10% and a five-year annuity of $1 per annum at 10% would have a present value of $3.79

What amount would be charged to profit or loss for the impairment of this asset for the year ended 30 September 20X4?

• $32,215

• $20,000

• $30,000

• $17,785

Which of the following is NOT an indicator of impairment under IAS 36 Impairment of Assets?

• Advances in the technological environment in which an asset is employed have an adverse impact on its furture use

• An increase in interest rates which increases the discount rate an entity uses

• The carrying amount of an entity's net assets is lower than the entity's number of shares in issue multipled by its share price

• The estimated net realisable value of inventory has been reduced due to fire damage although this value is greater than its carrying amount

Which assets must always tested for impairment annually even if there are no indicators.

(i) Intangible fixed assets with indefinite useful life

(ii) Intangible fixed assets with definite useful life

(iii) Property plant and equipment

(iv) Goodwill acquired in an business combination

(v) Goodwill acquired in an separate level

• (i) and (iv)

• (ii) and (iv)

• (iv) and (iii)

• (i) and (v)

Which statements belows is NOT CORRECT?

• The value in use of an asset is the present value of the future cash flows expected to be derived from an asset or cash-generating unit

• Goodwill can reverse an impairment loss arised in previous years

• The recoverable amount of an assets should be measured as the higher value of fair value less cost of disposal and its value in use

• A cash-generating unit is the smallest identifiable group of assets for which independent cash flows can be identified and measured

Which of the following are TRUE in accordance with IAS 36 Impairment of Assets.

(i) A cash generating unit is the smallest identifiable group of assets for which individual cash flows can be identified and measured

(ii) When considering the impairment of a cash generating unit, the calculation of the carrying amount and the recoverable amount does not need to be based on exactly the same group of net assets

(iii) When it is not possible to calculate the recoverable amount of a single asset, then that of its cash generating unit should be measured instead

• (i)

• (ii) and (iii)

• (iii)

• (i) and (iii)

In accordance with IAS 36 Impairment of assets, which of the following explains the impairment of an asset and how to calculate its recoverable

• An asset is impaired when the carrying amount exceeds its recoverable amount and the recoverable amount is the higher of its fair value less costs of disposal and its value in use

• An asset is impaired when the recoverable amount exceeds its carrying amount and the recoverable amount is the lower of its fair value less costs of disposal and its value in use

• An asset is impaired when the recoverable amount exceeds its carrying amount and the recoverable amount is the higher of its fair value less costs of disposal and its value in use

• An asset is impaired when the carrying amount exceeds its recoverable amount and the recoverable amount is the lower of its fair value less costs of disposal and its value in use

How long of maximum forecast period under IAS 36 suggested for calculated of value in use

• 3 years

• 5 years

• 10 years

• 15 years

The following information relates to an item of plant.

- Its carrying amount in the statement of the financial position is $3 million.

- The company has received an offer of $2.7 million from a company in Japan interested in buying the

plant.

- The present value of the estimated cash flows from continued use of the plant is $2.6 million.

- The estimated cost of shipping the plant to Japan is $50,000.

What is the amount of the impairment loss that should be recognised on the plant?

• $350,000

• $300,000

• $400,000

• $450,000