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Have been studying IAS 36 Impairment of assets, I would like to ask the following question.
On 31 december 2009 A ltd wrote off the carrying amount of its asset from $150000 to its recoverable amount of $120000. At that date the remaining useful life was five years . On 31 December there are indications that the impairment loss might have to reversed. On this date the recoverable amount of the asset amounted to $95000. What then is is the carrying amount of the asset after the necessary reversal and what is the amount of the reversal
You need to tell me what year this reversal is to take place ie what year is this second “31 December”?
Hi, I calculate the revised amount to be $90,000. If we had not impaired, the asset would have been 150,000 less 2 years’ depreciation over 5 years @ 30,000 each year gives a carrying value of ( 150,000 – 30,000 – 30,000 ) = 90,000.
So, after impairment, the value two years later is $120,000 less two years depreciation @ 24,000 per year = 120,000 – 24,000 – 24,000 = 72,000.
Now we want to reverse some of the impairment but we cannot “unimpair” to a value greater than the asset would have been if we hadn’t impaired in the first place. So, yes, unimpair, but only up to the value of $90,000
Clear?
quite clear thank you.
The next question is to do with financial calculators, are they allowed in the P2 exam
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