9/13/2022

Objective
TOPIC 6:

IAS 36- Impairment

 Ensure that assets are carried no more than
their recoverable amount.

 Define how the recoverable amount is

determined

Contents
IAS 36 applies to:  PPE (IAS 16)
 investment property at cost (IAS 40) Definitions
 intangible assets (IAS 38)
1
 goodwill
 subsidiaries, associates, and joint ventures at cost 2 Identification of impairment asset/CGU
 Assets at revalued amounts

3 Recoverable amount
IAS 36 does not apply to:
 Inventories (IAS 2) 4 Measuring & recognizing impairment loss
construction contracts (IAS 11)
 employee benefit (IAS 19)
 deferred tax assets (IAS 12) 5 Reversing an impairment loss
 financial assets (IFRS 9)
 non-current assets held-for-sale (IFRS 5)
 agricultural assets at FV (IAS 41) 6 Disclosure
Investment property at FV (IAS 40)

3 4

1
 9/13/2022

Definitions
An impairment loss is the amount by which the carrying amount of
an asset or a cash-generating unit exceeds its recoverable amount.
The recoverable amount of an asset or a cash-generating unit is the
higher of its fair value less costs to sell and its value in use.
Value in use is the present value of the future cash flows expected to
1. Definitions be derived from an asset or a cash-generating unit.
Fair value less costs to sell is the amount obtainable from the sale of
an asset or a cash-generating unit in an arm’s-length transaction
between knowledgeable, willing parties less the costs of disposal.
A cash-generating unit is the smallest identifiable group of assets for
which independent cash flows can be identified and measured.

Definitions Example

A mining company owns a private railway

Cash generating unit (CGU) that it uses to transport output from one of
its mines. The railway now has no market
value other than as scrap, and it is
impossible to identify any separate cash
= Smallest identifiable group of assets that generates cash inflows with the use of the railway itself.
Consequently, if the mining company
inflows largely independent from other assets suspects an impairment in the value of the
railway, it should treat the mine as a whole
as a cash generating unit, and measure the
recoverable amount of the mine as a whole.

7 8

2
 9/13/2022

Example

A bus company has an arrangement with a

town's authorities to run a bus service on four
routes in the town. Separately identifiable assets
are allocated to each of the bus routes, and cash
inflows and outflows can be attributed to each
2. Identification of
individual route. Three routes are running at a
profit and one is running at a loss. The bus
company suspects that there is an impairment of
Impairment
assets on the loss making route. However, the
company will be unable to close the loss-making
route, because it is under an obligation to operate
all four routes, as part of its contract with the
local authority.

Identification of Impairment - when? Identification of Impairment EX:

Carrying Fair value Value in Recoverable Impairment

amount less costs use amount loss
to sell
Asset A 10.000 12.000 18.000 18.000
Carrying amount (CA)
(Accounting records)
> Recoverable amount (RA)
Max (Fair value- cost to sell;
Asset B
Asset C
11.000
7.000
9.000
11.500
13.000
n/d
13.000
11.500
Value in use) Asset D 8.500 6.500 7.000 7.000
Asset E 12.750 n/d 16.800 16.800
Asset F 10.000 14.000 12.000 14.000
Asset G 21.000 15.000 10.000 15.000

CA – RA = Impairment loss

11 12

3
 9/13/2022

Identification of Impairment – When? Identification of Impairment

Indication of impairment
Indication of impairment At the end of each reporting
period

Intangibles with indefinite useful life External sources Internal sources

Intangibles not yet available for use
Goodwill acquired in combination
Annual test for Impairment
 Decline in market value
 Significant changes
Annual test for Impairment (Market, technology, legal, economic)
 Increase in interest rates
 CA> market capitalization
 Obsolescence / physical damage
Significant changes
(restructuring, discontinuing)
Internal reporting evidence

13 14

Identification of Impairment- What?

If possible An individual asset

If not possible A cash generating unit

3. Determining
recoverable amount.
Not possible to estimate the recoverable amount of the
individual asset, because:
 fair value less costs to sell cannot be estimated to be close to the
asset’s value.
 value in use can not be determined, because of the asset does
not generate cash inflows that are largely independent of those
from other assets. [IAS 36.66, 67]

15

4
 9/13/2022

Recoverable Determining Recoverable Amount - Note

amount
Higher of asset’s / CUG’s
Fair value less cost to sell
- If any of these >CA
- If FV – cost to sell impossible to set
• If fair value less costs to sell or value in use is
more than carrying amount, it is not necessary to
calculate the other amount. The asset is not
impaired. [IAS 36.19]
• If fair value less costs to sell cannot be
Value in use determined, then recoverable amount is value in
use. [IAS 36.20]
• For assets to be disposed of, recoverable amount
is fair value less costs to sell. [IAS 36.21]
No impairment
Use value in use

- Intangible assets with indefinite useful life Annually (exceptions)

17 18

Value in use Determining Value in use Future cash flows

Assumptions
Future cash flows Recent budgets/ forecasts
= Present value of the future cash flows expected
to be derived from an asset/CGU Extrapolation

Future cash flows • Cash inflows from continuing use

Variation include • Necessary and directly attributable cash outflows
•Net cash flows from disposal

• Future restructuring if not yet committed

Time value of money uncertainty
•Improving/ enhancing performance
Not include •Receivables/ Payables provisions or pensions
•Financial activities
Other factors •Income tax
19
20

5
 9/13/2022

Determining cash flows Determining cash flows

• Two approaches: • Estimated cash flows with a 40% probability they

1. Most likely cash flows from use and will be $120 and a 60% probability they will be
disposal discounted using risk-adjusted $80. Value in use?
discount rate. • Method 1: Most likely cash flows = $80. This
2. Probability-weighted cash flows from amount is discounted using a rate that takes into
use and disposal discounted using account all risks including the uncertainty of the
remaining risk-adjusted discount rate. cash flow amounts.
• Method 2: Expected value of cash flows = (120 ×
40%) + (80 × 60%) = $96. This amount is
discounted using a rate that includes remaining
risks.

21 22

Determining Value in use Discount rate 3. Xác định giá trị sử dụng Lãi suất chiết khấu

Lãi suất chiết khấu

Discount rate is pre- tax rate
be determined = Lãi suất trước thuế phản ánh đánh giá hiện hành của thị trường về

Giá trị thời gian Rủi ro cụ thể của tài sản

Time value of money and Risk specific to asset của đồng tiền
- Which the future cash flow estimates
have not been adjusted.

1. Market rate
2. When no market rate:
Market rates for equity are
usually stated post-tax
Pre-tax rate = Post-tax rate /(1-
tax rate)
-Weighted average cost of capital (WACC)
1. Lãi suất thị trường
- Incremental borrowing rate
-Other market borrowing rate -Chi phí VCSH trung bình
2. Khi không có lãi suất thị trường - Lãi suất vốn vay
23
- Lãi suất khác trên TT

6
 9/13/2022

3. Determining Value in use - EX

1. Future cash flows 2. Discounting 4. Measuring & recognizing

Year Future cash flows Discount factor at 10% Present value impairment loss
1 3.000 0,909 2.727
2 2.800 0,826 2.314
3 2.500 0,751 1.878
4 2.000 0,683 1.366
5 1.200 0,621 745
Total 11.500 9.031
25

4. Measuring & recognizing impairment loss Accounting for impairment

Impairment of an asset should be identified and accounted for as
Carrying Recoverable
follows:
Impairment loss
amount amount 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
Cost model Debit: P/L – Impairment loss recoverable amount.
Credit: Asset (adjustment)
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
Revaluation model Debit: OCI (Revaluation surplus) recoverable amount. The amount by which the value of the asset is
Or P/L (Impairment loss) written down is an impairment loss.
Credit: Asset 4. This impairment loss is recognised as loss for the period

Adjust depreciation for future periods to new carrying amount

27 28

7
 9/13/2022

Accounting for impairment Ví dụ: Tổn thất TS theo mô hình giá gốc
Giá trị ghi sổ của TS: 1 tr $; Giá trị sử dụng TS : 0.9 tr $
5. However, if the impairment loss relates to an asset that has Giá trị hợp lý: 0,71 tr $; Chi phí bán: 0,01$
previously been re-valued upwards, it is first offset against any • Giá trị có thể thu hồi =????
remaining revaluation surplus for that asset. When this happens it is
• Lỗ tổn thất TS =???
reported as other comprehensive income for the period ( a negative
value) and not charged against profit.
6. Depreciation charges for the impaired asset in future periods Ghi nhận?
should be adjusted to allocate the asset’s revised carrying amount,
minus any residual value, over its remaining useful life (revised
necessary)

29 30

Ví dụ:Tổn thất TS theo mô hình đánh giá lại Cash Generating Unit (CGU) IAS 36.105

CGU is the smallest identifiable group of asets that

- Vào ngày 1/1/2020, DN mua và đưa vào sử dụng một Thiết generates cash inflows largely independent from other
bị sản xuất với giá gốc 100 tr, thời gian sử dụng 10 năm, CGU shall be identified consistently
khấu hao đường thẳng.
- Ngày 31/12/2021; 31/12/2022, 31/12/2023: giá trị của TS CA of CGU
được đánh giá lại lần lượt là 93,6tr; 72tr, và 56tr. (include GW) > RA of CGU

Tính toán và Ghi nhận?

Impairment loss
Basis: carrying amount Do not reduce CA of an asset below
be allocated the highest of:
(a) its fair value less costs to sell
the assets of CGU (if determinable);
(b) its value in use (if
first, goodwill determinable);
then, the other assets (c) zero.
31
32

8
 9/13/2022

Testing of CGU with goodwill Corporate assets

RA of an individual corporate asset cannot
be determined  RA is determined for the
CGU or group CGU units to which the
Testing of CGU with Goodwill corporate asset belongs.

Testing annually or whenever there  Identify all the corporate assets that relate
Goodwill Building of a headquarters to the cash-generating unit
is an indication of impairment
Allocation to CGUs
Division of the entity
EDP equipment
 CA of a corporate asset can be allocated
Research centre. on a reasonable and consistent basis to
that CGU.
 compare the CA of CGU (including CA of
the corporate asset) with RA of CGU.

33 34

Tài sản doanh nghiệp

Giá trị có thể thu hồi của tài sản doanh

nghiệp có thể không được xác định
 cần xác định giá trị có thể thu hồi
của CGU hoặc nhóm CGU mà tài sản
5. Reversing
doanh nghiệp thuộc về
Building of a headquarters
 Xác định tất cả tài sản DN liên quan đến
an impairment loss
Division of the entity CGU
EDP equipment
Research centre.  Giá trị ghi sổ của TS doanh nghiệp có thể
được phân bổ dựa trên cơ sở hợp lý và
nhất quán với CGU.

 So sánh giá trị ghi sổ của CGU (bao gồm

giá trị ghi sổ của TS doanh nghiệp) với
giá trị có thể thu hồi của CGU. 35

9
 9/13/2022

Reversing an impairment loss Reversing an impairment loss

Is there any indication that impairment loss no longer exits? shall be reversed if and only if when change in estimates to determine RA

the amount or timing of cash flows

the discount rate;
components of fair value less costs to sell

External sources Internal sources   x

Significant changes
Increase in market value
Significant changes (restructuring,
(Market, technology, legal, enhancement)
economic) Internal reporting
Decrease in interest rates evidence
37
Individual asset CGU Goodwill
- Increased CA <= original CA - Allocation to assets pro rata
No
-P/L, or revaluation increase (No goodwill)
reversal
- depreciation: new CA CA of asset shall not be
increased above the lower of:
[IAS 36. 117-120]
RA & Original CA
38

Reversing an impairment loss Hoàn nhập lỗ tổn thất

No reversal of impairment loss for G/W
For other assets, reversal permitted if estimates used to determine
recoverable amount have changed

• For an individual asset:

– reversal limited to an increase to what asset would have
been, net of depreciation/amortization, if no impairment
had been recognized initially
– unless accounted for under the revaluation model – when
full reversal is permitted
• For a CGU:
– reversal is allocated to the assets of the unit, excluding G/W
– on basis of relative carrying amounts
– restrictions on individual assets still apply
40
39

10
 9/13/2022

Hoàn nhập lỗ tổn thất 8. Hoàn nhập lỗ tổn thất

41 42

Disclosure
For each class of assets:
◦ amount of impairment loss/loss reversals in P&L
◦ line item where loss/reversal is reported
◦ amount of impairment loss/loss reversals on revalued assets in OCI

6. Disclosure • Individually material loss/reversal:

– explanation of events and circumstances
– nature of asset/CGU
– how recoverable amount is determined
– amount of loss/reversal

44

11
 9/13/2022

Disclosure

For G/W and intangibles with indefinite lives:

◦ considerably more information provided
◦ enable users to assess reliability of impairment testing
◦ for individually significant intangible assets/CGUs
◦ if individually insignificant, disclose amounts

45

12