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ASSETS IMPAIRMENT REVIEW.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › ASSETS IMPAIRMENT REVIEW.

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
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  • March 3, 2021 at 11:04 am #612997
    ABDULLAHI312
    Participant
    • Topics: 106
    • Replies: 97
    • ☆☆☆

    Hi sir.
    If we said that current assets don’t go through impairment review where will we account for loss in the value of held inventory(closing) at the reporting date? as per IAS 2 inventory is valued at lower of cost and NRV. suppose it got damaged and NRV is lower, would that not be enough reason for impairment? (this question is in reference to question 50 of BPP revision kit).

    March 6, 2021 at 8:27 am #613696
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    IAS 36 is not applied to inventory, where the rules used are those from IAS 2. If the inventory is damaged then we would look at the new NRV and still then compare this to the cost to look at its potentially new value. If the NRV has fallen due to the damage but is still higher than cost then the inventory is still held at cost, hence no reduction in value of the current asset.

    Thanks

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