IND As 36 -1 IMPAIRMENT

of assets

By CA
PMA TK JAGATI
 IND M 36 -
IMPAIRMENT OF ASSETS .

RELEVANT DEFINITION
This standard shell not apply to ÷
Amount ! lost
Carrying
1. Ace Dep Ace 9mp loss
-

- . .
-

a) Inventories ( write down as

putrid As 2)
b) Defeated Care Asset Condos 12 ) 2. Deprivation ÷ systematic Allocation
of depreciable
4 Plan Ault Hnd A 19
) Amount over its useful life
-

d) Biological Asset measured at F- v. cts

-

e) Financial asset ( Dnd Mio 9) " " Pailmlht ↳ " ¥ Amount by whim
canayiy Away .

of
b) Not held for sale mpiemy.mpgfdasi.gg Asset / cqu exceeds Recoverable Amount
-

g) Contract Meets ( And A 115)

a) Defeated Aeg lost / anting ible Asset arising from
.
4. belt of disposal ? inclement lost dimly attributable
insurance cakes to disposal of an Nutley u
excluding
-

finance lost and Income lay bypensee .

This standard Applies to ÷ I

a) Financial Assets Classified subsidiaries find As 110) Amount

An Asset Is Impaired When
Candying
as

b) " " " " Associates

( end Arg)
find As 111)
exceeds Recoverable Amount
c) "
n n a Joint Venture

Impairment loss =
C. A. -
R .
A '

An
hntity shall Assess at the End of Each Reporting Mandatory Impairment letting whether or not
period whether ÷ indication exist i. e. test foe Impairment atleast
Impaired
-
there is
any
Indication chat asset may be
Annually 9-
If Any Indication Exist Estimate Recoverable Amount
a) Intangible As let with Indefinite Uclful life
.

If Recoverable Amount is caddying

6) Intangible Alot not
yet available for use .

e) Goodwin Business Combination

Amount in
less than
Aegiieed
.

Recognise Impairment toes

.
 Indications of Impairment
External Indication Internal Indication

a) Asat Mallet value has declined

significantly a) Obsolescence on
physical damage of an Asset -

more than would be by peeled due to passage of

time an Normal use

6) Asset becoming idle , Plan to discontinue on
.

destructive the operation

Reassessing the useful
-

6) Significant changes with an Adverse effect life of .

Asset as finite rather than Indefinite .

in
technological , market ,
economic or legal
environment .

c) Evidence Available
Indicating that ECONOMIC
PERFORMANCE of asset
/
is will be worse than

c) Market Interest hate

/ market date of return expected such Evidence Include %
-

may
an Investment have INCREASED affecting a) Cash needs for operating / maintaining
discount rates
.

the Allt all higher then budgeted .

b) orActual Net Cash F- cows

/ operating profit
d) Carrying Amount of wet asset is more

than malted -
Capitalisation
toes -

WORSE than budgeted -

Dividend from a subsidiary , jointly controlled

Entity and Associate
Investor deco dividend and evidence
guises
is available -
Chet ÷

a) c. A. of investment C. A. in CFS of
> all Assets
in SFS Investec's -

incl .

goodwill

b) Dividend 7 Total Comprehensive Income

of subs ICE Associate
.

, ,

in the period dividend is debated .

 ÷
Intangible
available poor
Asset with indefinite ohlful life
use to be tested for
/
Impairment
Not
yet Goodwin
is tested for
A CGU to which Goodwill has been allocated

impairment
a) Ahhhelly / Performed at
any time / Provided perfumed at Annually / Performed at
any
time
during annual period
theat same time every yeah ) .
provided test is performed at the same
time every year)

b) Whenever Indication at the end of

Reporting
period that asset be impaired 6) Whenever indication that unit be impaired
may may
.
.

Note
" " """"" "
" "" """ "" " """ " """"" "
" " ""
different ties
.

at different times
.

dating However if some / all Goodwin allocated to Chu was acquired

However it Intangible Hut was
initially recognised
shall be in a Business Combination during Casket Annual Period that unit
wheat -
Annual period that intangible Asset
✗
,

felted for impalement before the end of culled Ahhhh

-
shall be tested for impairment before the end of Current Annual period .

period
.

Individual Asset to be tested before Chu to which

However the most Recent detailed calculation of such Goodwin has been allocated
.

Asset 's Recoverable Amount in period may be used

preceding
provided all below conditions are met .

a) if Asset
constituting Cqv to which Goodwin has been
time
allocated all tested for impalement at the same as

a) 9 intangible Asset does not

generate cash flows
independently the CGU to which Goodwin has been allocated ,
the

and therefore tested for impairment as part of CGU to which Asset shell be tested before Chu to which goodwill
it belongs the Asset & liabilities making such CGU have allocated [ Similar concept for Ayu constituting Group
'

,
not
changed significantly since most decent R.tt calculation -

of Cao to which Goodwin has been allocated )

6) Most Recent Rat .

✗ c. A. of Asset
by substantial margin .

b) At the time of Impairment testing

.
a Gu lo which

Goodwin has been allocated ; if there is indication of impairment

c) Baled on
Analysis of events / liecumsCancer that home
of asset within the cqu , Entity for should test the Asset

Changed since most recent R.A. calculation impairment first before Cav to which Goodish allocated .

( similar concept for Cqu within Group of Chu to

which Goodwill has been allocated
The most recent detailed calculation made in preceding MEASUREMENT OF RECOVERABLE AMOUNT

f.
a

period of Recoverable Amount of CGU to which Goodwill

mooted

caiieeia are met

may be used in impairment

÷
test it below the R"
÷
" "" " tho ""
of an Asset CGU
/ is
higher
a) liabilities
A) fail Vhf we lost to sell whichever

G
The Assets and making such ecru have
-

not
chased significantly since most aeon, g.a. gannon is
higher .

b)
.

value in use
b) Most Recent B. A. 7 C- A.
of CGU by substantial
margin ↳ Discounted Cash Flow .

c) Based on Analysis of events

/ circumstances that have

① llhmstahllh In which not calculate

changed since most hleenl-R.A.cat? ,
the likelihood
" necessary "
to
that cashew AA -
-

less than Current c. A.

of equi, Remote .

both Asset 4 Fair value CTS & Value in use

-

a) if Either
of these Amounts exceeds Asset 's
candying Amount .

Examples of cost of DISPOSAL .

legal cost
, stamp Duty , similar
loans action taxes b) If Fail blue -

CTS Cannot be measured reliably .

lost of removing the Asset ,

Direct incremental cost asset into

to
boring an

condition for its sale .

Circumstances in which R .
A. is determined in context of
CGU
However , termination Benefits and cost associated
with Reducing / reorganising a bul inert
following Recoverable Amount is determined for an individual allll -

disposal of asset all hot direct incremental But if such asset does not
generate cash flow that are-

largely
colt independent of those from other Asset on
group of Asset
'

Value in Usl -

In Such Case , Recoverable Amount is determined for the CGU to

Prevent value of future cash Flows expelled which the asset

belongs Unless either :
-

to be derived from an Asset or CGU .

a) The Asset 's fate value less cost of disposal is

higher than
Ahio ant

Discount Rate Pretax

caddying .

-7 hate that deflects Cuelent

b) the Asset Y Viv can be estimated to be close to its Fu -

CTD
market assessments of ÷ a) Time value of money and fail value -

CTD Can be determined .

Risk specific to the Asset

b)
.
 cestimatesaffutueebsur-lowINL-EOI-II.LI
Detaining value in use .

3¥ UI E- Gen Inflows
a) projections Continuing from UU .

XX XX XX XX XX > Future cash

✓awe
Flows .

b) Crew outflows necessary to

generate Cash Inflows
use
from Continuing Ml ( Allocated Reasonable basis )
.

in on a

Future Cash Flows pulled

to present value using c) Cash outflows includes
Day to
Day servicing cost
Discount mates
-

a) Estimating future Ashe flows d) Terminal values F- v. -

cts ) .

Reasonable &
Supportable assumption of mgty best

estimates of economic condition .

Estimates of future Cash flows EXCLUDES ÷

Most Recent Financial budgets / Forecast approved by a) Excludes Receivables / payable / Pensions / Provisions ek .

mgt
.

6) Future Restructuring to which is

Entity is not -

Projections of may 5
yeah unless
longer period yet committed
.

justified .

4 Future Improvement / Enhancement of Asset 's

Cymeatee Weight to be teemed Evidence .

performance Forecasted on Current Condition)

.

Functional bouncy -7€ d) Chew In blows

/ outflows from financing Activities .

Foreign Cuhlency futile Cash flow} Foreign bouncy 1$

.

y Income tax Receipts / Payments .

I I

Fan
01
¥4 }¥$ I:& 55$ 7$
2=14--70"
'
'

Discount Rate
"
i. rave

= I 1540¥
appropriate for §
b) Discount Rates

Pine tag Rates reflects hole at Market Assessments of -1

a) Time value of money
-

b) Risk specific
to the Asset .

When Melt specific not available

mate is directly
from the market , the
Entity Estimates ? -

a) WALL
( weighted Average wee of Capito )
-

6) Incremental Rate
Borrowing
C) Other market
Borrowing mate .

u
 A9ÑÑÑ
"

CASH •west asset

.

GENERATING units ago

.

of To determine Whether Asset Generate Cff that are

A CGU is the SMALLEST IDENTIFIABLE Group of Assets

largely independent of Clf from other Ants
-

Cath Inflows
-
that
generates
that all
largely independent of Gen Inflows from other
'

Output 04PM
-

A
-

nuts
/ Group of Assets
B Independent
.

third
party
F "
A B
Asset A produces output which Asset B produces output
-

Individual D
A" " '

9 I
is transferred to Asset B which is lfd.to Independent
e E

third party
-

Generate GF cqu L CGU 2 CGU 3

independently feet ! Active market fight fair A 's output
.

Asset A is a
separate Ash Generating Unit
Example -9 Indication of Impairment 4- Asset B because it is capable of
generating cash flows even it
① it is not Chlh flows
generating
.

If it is not possible to determine Recoverable amount

of asset B-

① Case hi .
Active Mallet doesnt exist for AG output .

Determine Recoverable Amount of CGUL

.

Asset A is not a separate Cash Generating unit

① because it is not capable of generating Ash flows .

Compare RA of -

chul win CA of chul

① if I B together forms a cqu .

If CA 7 RA if Impairment of equ -1
NOI :
-

If Cash flows generated by /

asset ecru all
affected by INTERNAL TRANSFER PRICING
RA of Individual Asset Cannot be determined if : -

I
a) Asset's value in use cannot be Estimated to be close Entity shall or best estimate of future prices that

to its rail value less lost to disposal .

could be achieved in ARMY LENGTH TRANSACTION

-

6) Asset do not
generate CIF largely independent of thou

from other Assets .

 C. GU -

L
CGU -

{ | { |
""" ^ " " ""° "

" °o°" """ "

& """ ^ " " ""° "

" °o°" ""Mt &

Machine B -9 I 30000 Entire Chu t is 2=115000
Machine B. -9 I 30000 Entire Chu t is 2=115000
software oy 2- soooo
.

software oy 2- soooo
.

Inventories =Y I 40000
Inventories =Y I 40000
DTA -7 I 5000 NRV =
2-
320¥
DTA £ sooo
145000
145000

SOI -9 C- A- of Chu 1 => 145000 Therefore updated c. A. before Impairment loss

R A. of Chu
-

1
i 115000

Impairment lose -7 30000 Machine A = 50000

Machine B Ii =
30000

Impalement loss ? software

Allocated
proportionately = 20000

Revised banging Amount Inventories 40000-8000

=
32000
Imp -

loss

Machine A =
30000×5000%000 = 15000 35000 DTA
=
5000

Machine B ✗ 30000%0 21000 137000

=
30000 = 9000
Tom candying Amant =

Software = 30000 ✗ 2000%00 = 6000 14000 R.A. = 115000

Inventories = No Imp .
as per Ind As 36 = -

40000 f. Impairment log = 22000

DTA =
No Imp .
as per Ind As 36 = -

5000
115000
machine A machine Be software
aaooo.is?::-oaaooo,::::-oaaoooxY:::-oo
= 11000 =
6600 =
4400

Revised C- A-
=p Machine A =
39000
Machine D= 23400
Software = 15600

Inventories = 32000

DTA =
500£ =

115000€
 '
n

Allocating Goodwill to Chu

C. GU -

| /
Goodwin £7500 Allocation of Impalement loss of 2--27000

""" ^ " " ""° '

Machine B -9 I 30000 R.A. =

27500 ^

a) 1st Allocated Entirely to

Goodwill
software -7 2=20000 b) Balance to other Eligible Assets pro Nek Basis
-

on

Inventories =Y I 40000 NRV =

2-
32000€
, ,, , y g, , ,
go.gw.y.gg , , .gg, , ,
µ, ,

152500 Recoverable Amount

of CGU 1=115000 -

machine A = 50000 -

igsroo ✗
5%9%-0 =
36071-5
Machine B = 27500*1 =
27500
Software =
20000 -

19500×21%0 = 14428.5
i. Dmpaishrent lots on Machine D= 30000 -27500 Inventories = 32000*1 =
32000
FIND AS 36
) =
2500-(8/1) DTA = 5000
*
=
50-00
Revised candying Amount
I. Write down on Inventories =
40000 -32000
(IND As 2) = 8000 ( PR)

i. UPDATED C. A. af CGUL -

=
Goodwin + Machine A 1- Machine B + software -19nvcntoeies
+
DTA
= 7500 -150000 -127500 / Revised) + 20000 -132000 (updated )
+ 5000
142000
=

Recoverable Amount of Chu t = 115000

i. Impalement cols = 142000 -

115000
=
27000
Allocating corporate Assets to Chu

corporate Abets Head grantees on a division of .

research centre
the
entity EDP Equipment or a
.

Corporate needs do not generate separate crash

the
Inflows and they all tested for impairment in
context of cgv / Group of CGU 's . .

ce.g.CI cGu3_
Machine A =
15000 Machine 6 45000 Machine E
=
40000
Machine B 35000 Machine D -7 5000 25000
intangible
= =

Receivables =
15000 Fuluitule -7 25000 Inventories = 15000
Fuhaihore =
5000 AC's 25000

R .
A- =
85000 RA.
=
70000 -

R A - -
= 70000 -

CGI
Machine A is
physically damaged and only I Looo Realised from sale of
I 500
machine selling lost =
Machine A Cannot be put to use
.
.

CGI
Machine C is a separate CGU and, its value in use is
estimated to be £90000 Fu ,
-
HD =
I 38000 '

V¥_nu entries NRV as per Ind As 2 is I 12000 .

Thereis a Building whose C. A- is I tooooo

which Can be allocated to CGU 1 , eh v2 , CGU 3 in the

ratio of 2 : 2! I
REVEMSINGANIMPAIRM-t.NL# ^

Indicatuinofreuuedoftmpaiemcntloss.la
An
ch
Entity required
is

reporting
assess

period whether is
of to at the end

there any
in External sources
indication that Impalement lots Recognised
) a) Observable Indication that Asset value increased
prion periods bar an asset ( except Goodwill
longer exist have deloused significantly
may
-

or
may
no .

An Impairment lots is not revealed just 6) Significant favourable Changes in technological ,

of PASSAGE if melted legal , economic environment
-

because the of Tom E even

-

Asset 's R A > c. A

-
-

C An asset rake in use become greater c) Market Interest hate

/ other market males d-
may Investment decreased
then Asset 's Rehan oh has
carrying Amount simply because
.

Present value of cash inflows increased as

they
become closely Internal sources .

Reversal of goodwill is prohibited .

af significant favourable changes have taken place -

thischanges include lost invaded to improve on

Reversal of Impairment lots for CGV shall be enhance the assets performance on Restructure
allocated to -

the asset of the unit except the operation to which alot belongs -

Goodwill on a pro Mata basis .

6) Economic performance better then expected .

Non
Controlling Interest -

the impact on Goodwin c) Indication that impalement loss Recognised for

impairment letting an and -

( except goodwill ) may no longer exist

have decreased
or may
.

We win understand practically while solving

illustration 11 .