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(Corporate Reporting) : Ghias Ul Hassan Khan
(Corporate Reporting) : Ghias Ul Hassan Khan
(Corporate Reporting)
If the carrying amount exceeds the recoverable amount, the asset is described as impaired. The
entity must reduce the carrying amount of the asset to its recoverable amount.
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Impairment indicators
External sources
1.A significant decline in the asset’s market value more than expected by normal use or passage of time
Internal sources
1.Significant changes, in the period or expected, in the way the asset is being used e.g., asset becoming idle, plans
for early disposal or discontinuing/ restructuring the operation where the asset is used
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Impairment review
If the carrying value of the asset is greater than its recoverable amount, it is impaired and
should be written down to its recoverable amount.
1.Recoverable amount - the greater of fair value less cost to sell and value in use.
2.Fair value less costs to sell - the amount receivable from the sale of the asset less the costs of
disposal.
3.Value in use - the present value of the future cash flows from the asset.
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Record the Impairment
Individual asset
The reduction in carrying value is taken through profit or loss unless related to a revalued asset,
in which case it is taken to any revaluation surplus first.
2.Goodwill
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Question - CGU
Peter owned 100% of the equity share capital of Sharon, a wholly-
owned subsidiary. A The remaining plant was worth at least its carrying
The assets at the reporting date of Sharon were as follows: value.
Other intangibles 2,000 The receivable and cash are both stated at their
realizable value and do not require impairment.
Receivables and cash 1,400 17,000
Show how the impairment loss in Sharon is
On the reporting date a fire within one of Sharon’s buildings led to
an impairment review being carried out. allocated amongst the assets.
The recoverable amount of the business was determined to be $9.8 Note: Within a group of companies where there are several
subsidiaries, the individual CGUs (subsidiaries) are tested for
million. The fire destroyed some plant and equipment with a
impairment first, before the overall value of the business is tested.
carrying value of $1.2 million and there was no option but to scrap
it.
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IAS 33 – EPS
what is EPS?
Basic EPS can be calculated by:
We need to take weighted average number of share because of change in the total number of
shares during the year.
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Reasons for change in number of shares
1. Full price shares
2. Bonus issue
3. Right issue
4. Stock split
5. Stock contraction
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Diluted EPS
EPS may be diluted due to the following reasons:
1.Convertible instruments - By adding the maximum number of shares to be issued in the future
2.Options - By adding the number of effectively “free” shares to be issued when the options are
exercised
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Thanks
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