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Hi,
I have a question concerning the reverse of impairment.
For example: At 31/12/2020, I have a PPE with carrying amount of 10 and remain useful life 5 years. The recoverable amount at 31/12/2020 is 7 so I recorded the impairment expense for 2. At 31/12/2021, the carrying amount is 7-7/5=5.6, the recoverable amount at that time is for example 7.5. So I wonder at which amount can I reverse the PPE to, 8 (as if no impairment incur, the carrying amount would be 8 at 31/12/2021) or 7.5?Hi,
I think the initial impairment needs to be 3 (10 – 7 = 3 and not 2) but otherwise the revaluation can only be to the value the asset would have been without the impairment. In this instance then you cannot increase it above the 8.
Thanks
Sorry for my typo regarding the initial impairment and I agree that it should be 3. My question is that after the first year, the recoverable amount is 7.5 so that means I can reverse part of the impairments and record the PPE at 7.5 is that right?
Thank you so muchYes, that’s correct. If the fair value is 7.5 then we can revalue to this amount.
Thanks
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