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Reversal of Impairment losses

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Reversal of Impairment losses

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by P2-D2.
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  • August 26, 2019 at 10:18 am #528832
    alikhakar
    Participant
    • Topics: 187
    • Replies: 79
    • ☆☆☆

    Suppose an asset worth 5000 with useful life of 5 year was bought on 1jan2016 recorded subsequently at fair value.

    On 31 dec2016 the carrying value is 4000 but recoverable value is 3500 therefore we recognise 500 impairment losses in SOPL

    On 31 dec 2017 the fair value of asset was 5000. According to IAS36 we can only recognise gain of 375 (3000 – 2625) and get the carrying value of asset at 3000. But if this is the case then what about the fair value of 5000 at present ? If we are ignoring this then what is the importance of IAS16 Fair value model ?
    Thanks

    August 27, 2019 at 9:12 pm #540273
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    It could be revalued upwards if it was held under the revaluation model, but in this instance it appears to be held under the cost model and so not revalued.

    Thanks

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