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Philippine Public Sector Accounting Standards 26

IMPAIRMENT OF CASH GENERATING ASSETS

Table of Contents
PAG
Number

BACKGROUND
INTRODUCTION TO THE IPSAS 26
PHILIPPINE APPLICATION GUIDANCE TO IPSAS
26
Scope

1

Effective Date

2

PPSAS 26 - Impairment of Cash Generating Assets
January 2014

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(b) Has been assigned the financial and operational authority to carry on PPSAS 26 . Holding an asset to generate a “commercial return” indicates that an entity intends to (a) generate positive cash inflows from the asset (or from the cash-generating unit of which the asset is a part). “Impairment of Cash Generating Assets”. GBE is an entity that has all the following characteristics: (a) Is an entity with the power to contract in its own name. Philippine Application Guidance to IPSAS 26 Scope PAG1. and (b) earn a commercial return that reflects the risk involved in holding the asset.Impairment of Cash Generating Assets January 2014 Page 2 . and to ensure that impairment losses are recognized. Introduction to the IPSAS 26 IPSAS 26 provides that cash-generating assets are assets held with the primary objective of generating a commercial return. 2012. An asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity. and the Philippine Application Guidance (PAG) prepared to suit the Philippine public sector situation. The PAG (in italics) provides supplementary guidance on the proper implementation of IPSAS 26.Paragraph 3 deals with the applicability of this Standard to all public sector entities other than Government Business Enterprises (GBEs). It also specifies when an entity shall reverse an impairment loss. and prescribes disclosures. The IPSAS 26 was issued in February 2008 by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC).PHILIPPINE APPLICATION GUIDANCE TO IPSAS 26 Impairment of Cash Generating Assets Background This Philippine Public Sector Accounting Standard (PPSAS) 26 consists of International Public Sector Accounting Standard (IPSAS) 26. This includes amendments resulting from IPSASs issued up to January 15. This Standard sets out the procedures that an entity shall apply to determine whether a cash-generating asset is impaired.

Impairment of Cash Generating Assets January 2014 Page 3 . and (e) Is controlled by a public sector entity. 2014. in the normal course of its business. This standard shall be applied to all National Government Agencies (NGAs).This PPSAS shall apply for annual financial statements covering periods beginning January 1. (d) Is not reliant on continuing government funding to be a going concern (other than purchases of outputs at arm’s length). Local Government Units (LGUs) and Government-Owned and/or Controlled Corporations (GOCCs) not considered as GBEs. Effective Date PAG2. (c) Sells goods and services.a business. to other entities at a profit or full cost recovery. PPSAS 26 .