Reversal of impairment loss
At each reporting date, consider indications that an earlier impairment loss for an asset other than goodwill may have decreased or no longer exist. If estimates used to determine recoverable amount have changed, increase carrying amount only up to the amount that would have existed, net of depreciation or amortisation, had no impairment been recognised. Account for a revalued asset under the relevant revaluation rules. A goodwill impairment loss is never reversed in a later period.
Worked example
A machine’s impaired carrying amount is 60, its revised recoverable amount 90 and its carrying amount without the earlier impairment would have been 80. Reverse only 20, raising the carrying amount to 80, not 90.
Common mistake
Reversing a goodwill impairment or increasing another asset above its hypothetical carrying amount without the original impairment.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |