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Hierarchy for reversal of impairment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Hierarchy for reversal of impairment

  • This topic has 2 replies, 2 voices, and was last updated 6 years ago by trainee1.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 15, 2018 at 1:29 pm #467998
    trainee1
    Participant
    • Topics: 57
    • Replies: 30
    • ☆☆

    Hello Sir

    I know that there is a hierarchy for impairment loss:
    1-Specific asset
    2-goodwill(to nill)
    3-other assets pro rata

    is there any hierarchy for reversal of impairment or not?

    let me explain my question with asimple example:
    there is a division which its carrying value is 25:
    Goodwill 10
    Land 15
    at the end of yr1 impaired BY for example $15m and we allocate is as follows:

    goodwill 10-10=0
    Land 15-5=10

    how should we record the reversal of $12m for the end of year 2?
    I know that we are not permitted to reverse impairment of goodwill.
    is there any hierarchy for reversal?
    which is correct?
    1- reverse $5m to the land FIRST and the remaining amount of $7m is not permitted for goodwill
    (so total reversal is 5)
    OR

    2-reversal of $10m is not permitted for goodwil FIRST and the remaining amount(ie $2m) is permitted for land.
    (so total reversal is 2)

    thank you in advance

    August 17, 2018 at 2:34 pm #468216
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The reversal of an impairment loss for a CGU is allocated to the assets pro rata based upon their carrying value. There would however be no increase in the value of goodwill.

    The increase in the carrying value is not increased above the lower of the recoverable amount and the carrying value if no impairment had been recognised.

    I’d not spend too much time on this in FR as the focus in the exam is likely to be on the basics of performing an impairment.

    Thanks

    August 18, 2018 at 4:06 am #468314
    trainee1
    Participant
    • Topics: 57
    • Replies: 30
    • ☆☆

    Hello

    Thank you for your reply

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘Hierarchy for reversal of impairment’ is closed to new replies.

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