(Continued)

1. Initial recognition of impairment losses [IAS 36.60]

Normally impairment loss is recorded as expenses in PL directly. Except for the case when the impaired asset is accounted for under revaluation model, impairment loss is then accounted as same as a revaluation decrease, ie. impairment loss is used to revert outstanding balance of the respective revaluation surplus previously recognized for that asset.

2. Subsequent accounting for the impaired asset [IAS 36.63]

Subsequent to the impairment losses:

- Impaired asset will continue being depreciated over its revised remaining useful life

- Depreciation now be based on its new revalued amount, its estimate residual value and remaining useful life

3. Reversal of impairment losses

a. Asset other than Goodwill

Assessment

At the end of each reporting period, the company is required to assess whether there is indicator that impairment loss recognized in prior periods may no longer exist or may have decreased. If such indication exits, the entity shall estimate a new recoverable amount of that asset.

These indicators may be internal or external factors which are quite similar to those when evaluating impairment at the beginning.

Recognition of reversal [IAS 36.114] & [IAS 36. 117]

Please be noted that reversal of impairment loss is only to extent of its carrying value which would have been determined if the impairment loss is not recognized. The excessive amount between the new recoverable amount and the carrying value of the asset which would have been determined if the impairment loss is not recognized is a revaluation. In accounting for this revaluation, the company shall apply specific IFRS which is applicable for the asset.

Similar to impairment of asset accounted for under revaluation model, a reversal of impairment losses on an asset is recognized immediately in PL, unless the asset is accounted for under revaluation model. In case of revaluation model, the reversal of impairment loss is treated as a revaluation increase in accordance with applicable IFRS.

b. Impaired Goodwill

Pursuant to [IAS 36.124], impairment on goodwill could not be reverted in any case.

Notes: matters of CGU and allocating impairment loss to an impaired CGU (which comprise Goodwill) are not addressed in these 02 articles.

References

- IAS 36 Impairment of Asset

- Training documents composed by ACCA Vietnam (2017)