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The objective of IAS 36 is ensure that entity ‘s assets are carried at no more than their recoverable amount. However , IAS 38 allow two model to value the intangible assets after they have been first recognised , which is cost model and revaluation model .
However , what is the treatment where the intangible asset has a carry amount lower than it recoverable amount . Is that mean we have to revaluation the intangible assets base on its recoverable amount that according IAS 36 .
For example , at 1 jan 2017 an intangible asset has carry amount $1m , however at the same date an impairment review concluded that had a value in use $1.5m , meanwhile a company offer a consideration $1.8m to purchases the intangible asset .
Is that mean we have to revaluation the intangible asset based on the $1.8m , since the reoverable amount according to the IAS 36 will be $1.8m
If you’re applying the revaluation model, that’s exactly what it means
If you’re applying the cost model, it wouldn’t matter if recoverable amount were 10 times the amount of the carrying value! You’ve elected to use the cost model so you’ll carry the asset at cost less accumulated depreciation
OK?
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