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Impairment of a ROU Asset

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Impairment of a ROU Asset

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by Stephen Widberg.
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  • May 24, 2022 at 11:58 am #656321
    james8500
    • Topics: 48
    • Replies: 9
    • ☆☆

    If a ROU asset is impaired under a lease agreement, how does this affect the corresponding lease liability?

    I have read the below technical article but struggling to get my head around when apply IAS 36 or IAS37.

    https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/strategic-business-reporting/technical-articles/lease-contracts.html

    May 25, 2022 at 8:01 am #656411
    Stephen Widberg
    Moderator
    • Topics: 10
    • Replies: 2563
    • ☆☆☆☆☆

    Assume I am lessor.

    At inception, ROU asset and lease liability is 400.

    The next day I break the asset and it is not insured.

    Dr P&L Cr ROU

    But I still have to pay for it, so no adjustment to liability unless I can negotiate a settlement with lessor.

    Here’s a quote from the article you highlighted:

    “However, candidates should also appreciate that marks will be awarded for any discussion that is rational and logical, even though it doesn’t appear in the suggested solution.”

    🙂

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