IMPAIREMENT OF ASSETS

CHAPTER XXIII
Section 1. Objective and Scope
Impairment loss occurs when carrying amount of an asset
exceeds its recoverable amount.
Section 2. Impairment of Inventories
2.1 Selling price less cost to complete and sell.
2.2 Reversal of impairment
Section 3. Impairment of other assets
3.1 General principle
3.2 Indicators of impairment
3.4 Measuring Recorevable 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. If it is not possible to estimate the
recoverable amount of an individual asset to an asset should be read as
references also to an asset’s cash-generating unit.
3.5 Fair value less cost to complete and sell

Fair value less costs to sell is the amount obtainable from the sale of an asset in
an arm’s length transaction between knowledgeable, willing parties, less the costs
of disposal. The best evidence of the fair value less costs to sell of an asset is a
price in a binding sale agreement in an arm’s length transaction or a market price
in an active market. If there is no binding sale agreement or active market for an
asset, fair value less costs to sell is based on the best information available to
reflect the amount that a cooperative could obtain, at the reporting date, from the
disposal of the asset in an arm’s length transaction between knowledgeable,
willing parties, after deducting the costs of disposal. In determining this amount, a
cooperative considers the outcome of recent transactions for similar assets within
the same industry.
3.6 Value in use

Value in use is the present value of the future cash flows expected to be derived
from an asset.
3.7 Recognition and Measurement of Impairment of
CGU
Section 4. Reversal of an Impairment Loss
Section 5. Reversal Where Recoverable Amount was
estimated for an individual impaired asset
Section 6. Reversal when recoverable amount was
impaired
CHAPTER XXIV: EMPLOYEE BENEFITS

Employee benefits are all forms of consideration given by a cooperative in

exchange for service rendered by employees.
Section 2. General Recognition Principle for All
Employee Benefits
Section 3. Short-Term Employee Benefits
Measurement of Short-Term Benefits Generally

When an employee has rendered service to a cooperative during the reporting

period, the cooperative shall measure the amounts recognized in accordance
with Section 2 of this Chapter at the undiscounted amount of short-term
employee benefits expected to be paid in exchange for that service.
Recognition and Measurement—Short-Term
Compensated Absences
A cooperative may compensate employees for absence for various reasons
including annual vacation leave and sick leave. Some short-term compensated
absences accumulate— they can be carried forward and used in future periods if
the employee does not use the current period’s entitlement in full. Examples
include annual vacation leave and sick leave. A cooperative shall recognize the
expected cost of accumulating compensated absences when the employees
render service that increases their entitlement to future compensated absences.
The cooperative shall measure the expected cost of accumulating compensated
absences at the undiscounted additional amount that the cooperative expects to
pay as a result of the unused entitlement that has accumulated at the end of 66 |
Page the reporting period. The cooperative shall present this amount as a current
liability at the reporting date. A cooperative shall recognize the cost of other
(non-accumulating) compensated absences when the absences occur. The
cooperative shall measure the cost of non-accumulating compensated absences
at the undiscounted amount of salaries and wages paid or payable for the period
of absence.
Recognition—Profit-Sharing and Bonus Plans
Section 4. Post-employment benefits: distinction
between defined contribution plans and defined benefit
plans
Defined contribution plans

) Defined contribution plans are post-employment benefit plans under which a

cooperative pays fixed contributions into a separate entity (a fund) and has no
legal or constructive obligation to pay further contributions or to make direct
benefit payments to employees if the fund does not hold sufficient assets to pay
all employee benefits relating to employee service in the current and prior periods.
Thus, the amount of the post-employment benefits received by the employee is
determined by the amount of contributions paid by a cooperative (and perhaps
also the employee) to a postemployment benefit plan or to an insurer, together
with investment returns arising from the contributions.
Defined Benefit plans

Defined benefit plans are post-employment benefit plans other than defined
contribution plans. Under defined benefit plans, the cooperative’s obligation is to
provide the agreed benefits to current and former employees, and actuarial risk
(that benefits will cost more or less than expected) and investment risk (that
returns on assets set aside to fund the benefits will differ from expectations) are
borne, in substance, by the cooperative. If actuarial or investment experience is
worse than expected, the cooperative’s obligation may be increased, and vice
versa if actuarial or investment experience is better than expected.
Insured Benefits
Section 5. Post-Employment Benefits: Defined
Contribution Plans
Section 6. Post-Employment Benefits: Defined Benefit
Plans
6.3 Discounting

A cooperative shall measure its defined benefit obligation on a discounted present

value basis. The cooperative shall determine the rate used to discount the future
payments by reference to market yields at the reporting date on high quality
corporate bonds. The currency and term of the corporate bonds or government
bonds shall be consistent with the currency and estimated period of the future
payments.
6.4 Actuarial Valuation Method

If a cooperative is able, without undue cost or effort, to use the projected unit
credit method to measure its defined benefit obligation and the related expense, it
shall do so. If defined benefits are based on future salaries, the projected unit
credit method requires a cooperative to measure its defined benefit obligations on
a basis that reflects estimated future salary increases.
6.5 Plan Introductions, Changes, Curtailments and
Settlements
If a defined benefit plan has been introduced or changed in the current period, the
cooperative shall increase or decrease its defined benefit liability to reflect the
change, and shall recognize the vested past service as an expense in measuring
profit or loss in the current period. Unvested past service costs shall be amortized
over the remaining vesting period of the covered employees. Conversely, if a plan
has been curtailed (ie benefits or group of covered employees are reduced) or
settled (the employer’s obligation is completely discharged) in the current period,
the defined benefit obligation shall be decreased or eliminated, and the
cooperative shall recognize the resulting gain or loss in profit or loss in the current
period.
6.8 Actuarial Gains and Losses

A cooperative is required to recognize all actuarial gains and losses in the period
in which they occur. A cooperative shall recognize all actuarial gains and losses in
profit or loss.
Section 8. Termination Benefits

A cooperative may be committed, by legislation, by contractual or other

agreements with employees or their representatives or by a constructive
obligation based on business practice, custom or a desire to act equitably, to
make payments (or provide other benefits) to employees when it terminates their
employment. Such payments are termination benefits.
Recognition
Measurement

A cooperative shall measure termination benefits at the best estimate of the

expenditure that would be required to settle the obligation at the reporting date. In
the case of an offer made to encourage voluntary redundancy, the measurement
of termination benefits shall be based on the number of employees expected to
accept the offer.
Section 9. Disclosures
9.3 Disclosures About Defined Benefit Plans
Thank you!
Augustine B. Pastor
Reporter