- November 22, 2015 at 3:54 pm #284368
Thanks for your reply sir.but is not it when FA measured at FVTOCI any impairment allowance is not adjusted against the carrying amount of asset instead it is recoreded in Por L with a corresponding credit entry in OCI.
i also want to know sir what would be the double entry for impairment if FA measured at AMORTISED COST.Thank you.November 23, 2015 at 5:35 pm #284752
Here’s a relevant extract from the EFRAg appropriate document:
“5.5.2 An entity shall apply the impairment requirements for the recognition and
measurement of a loss allowance for financial assets that are measured at fair
value through other comprehensive income in accordance with paragraph
4.1.2A. However, the loss allowance shall be recognised in other comprehensive
income and shall not reduce the carrying amount of the financial asset in the
statement of financial position.”
That expression “the loss allowance shall be recognised in other comprehensive
income” does NOT suggest Dr Profit or Loss and Cr Comprehensive Income! What it’s saying is that the debit entry should go through Comprehensive Income and the credit is into a “Loss allowance” account and not to the financial asset account.
Think of like the account “Allowance for receivables” (if you’re UKGAAP you may prefer Provision for Doubtful Debts). When an allowance is made against the possibility of a receivable failing to pay, we don’t credit the receivables account. Instead we establish a provision account.
Impairment of assets held at amortised cost – annual impairment review and, if appropriate, charge any impairment annual adjustment to profit or lossNovember 24, 2015 at 7:44 am #284835
Thank you sir.November 24, 2015 at 8:47 am #284856
You’re welcomeNovember 25, 2015 at 6:05 am #285066
Sir please help me for the following problem.
If 2 manufacturing units(MU) is identified to be disposed in a single transaction and criteria for ifrs 5 are met.and there was impairment recognised of $15m prior to the MU classied as held for sale.what happens when their fair value less cost of sales incresed at year end by $30M.note that here FV-COS =recoverable amount.what they did they charged $15m to increase the carrying value of disposal group.is it because they reversed the $15 m impairment recognised earlier on to PorL from $30m dollar gain.and the rest $15m is added to the Cv of disposal.November 25, 2015 at 6:10 am #285068
The solution says the change in FV-COS is recognised but the gain recognised cannot exceed any impairment losses to date.
My understanding of the above is that if no impairment recorded previously no change is recognised for FV -COS.
Am i missing something sir,my thought process is that when any asset is impared and in subsequent year it has a revaluation gain we charge the gain to Por L to the extent it reverses the impairment recorded previously.
Is it different for manufacturing units held for sale in a single transaction.please help.November 25, 2015 at 3:15 pm #285069
Can you clarify this please with an example:
“Subsequent increases in FV cannot be recognised in POrL in excess of the cumulative impairment losses that have been recognised.”
If subsequent gain is 40million dolkar and previously recognised impairment is 10million dollar.what happens to the extra $30 m increase in Fv does this increase the asset carryin value which 8s held for saLe under ifrs 5.
Hope you got my problem not very good at explainin my problems in writing.sorry for the painNovember 25, 2015 at 7:09 pm #285277
I’m getting conflicting pictures with this.
One says “subsequent remeasurement to fair value less costs to sell” where another says “subsequent increases to PorL but limited to previous impairments
Honestly …. I’m not going to give you a definitive answer because I am struggling for time to research it any more
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