14 February 2013
On 18 January 2013, the IASB issued ED/2013/1 "Recoverable Amount Disclosures for Non-Financial Assets – Proposed Amendments to IAS 36". Our latest article gives an overview of the proposed key amendments to “IAS 36 - Impairment of Assets”. Comments can be addressed to the IASB until 19 March 2013.
While developing IFRS 13 Fair Value Measurement
, the Board decided to require additional disclosures in IAS 36 about the measurement of the recoverable amount of impaired assets, particularly when the basis was fair value less costs of disposal. However the amendments made to IAS 36 have wider scope than intended: they required disclosure of the recoverable amount of any cash-generating units that contain significant carrying amounts of goodwill or intangible assets with indefinite useful lives, regardless of whether or not impairment had been recognised. The IASB proposes to amend IAS 36 to require disclosure of the recoverable amount of an individual asset (including goodwill) or a cash-generating unit for which the entity has recognised or reversed an impairment loss during the period.
Moreover, the IASB also proposes to require disclosure of the following information about the fair value less costs of disposal of an individual asset (including goodwill) or a cash-generating unit for which an impairment loss has been recognised or reversed during the period, consistently with the disclosure requirements for impaired assets in US GAAP:
- description of the valuation technique(s) used to measure fair value less costs of disposal;
- in the case of a change in the valuation technique, that change and the reason(s) for making it;
- the level of the fair value hierarchy according to IFRS 13 within which the fair value measurement of the asset is categorised in its entirety;
- for fair value measurements that are categorised within Levels 2 and 3 of the fair value hierarchy, the key assumptions (including the discount rate, if a present value technique is applied) used when determining them.
It is planned to require retrospective application of these amendments. In the case of calendar year reporting periods it would be necessary to apply the amendments for the first time in the financial statements for the annual period ending on December 31, 2014. As usual, the IASB intends to permit earlier application. However, the amendments must not be applied in periods (including comparative periods) in which IFRS 13 is not yet applied.
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