Recognition of an impairment loss creates a deferred tax asset An entity has an asset with a carrying amount of €2,000 whose recoverable amount is €1300. The tax rate is 30% and the tax base of the asset is €1,500. Impairment losses are not deductible for tax purposes. The effect of the impairment loss is as follows: Before impairment € Effect of mpairment € After […]

Impairment of assets held for sale Entity A decided to sell a group of three assets in one transaction to the same acquirer. Each asset had been part of a different CGU. The decision to sell was made on 20 December 2012, just prior to Entity A’s year end of 31 December. The assets met IFRS 5’s requirements for classification as a disposal group on […]

Individually impaired assets within CGUs A machine has suffered physical damage but is still working, although not as well as before it was damaged. The machine’s FVLCD is less than its carrying amount. The machine does not generate independent cash inflows. The smallest identifiable group of assets that includes the machine and generates cash inflows that are largely independent of the cash inflows from other […]

Identification of cash-generating units Example A – newspapers An entity publishes 10 suburban newspapers, each with a different mast-head, across 4 distinct regions within a major city. The price paid for a purchased mast-head is recognised as an intangible asset. The newspapers are distributed to residents free of charge. No newspaper is distributed outside its region. All of the revenue generated by each newspaper comes […]

Double counted losses At the end of 2013, an entity with a single CGU is carrying out an impairment review. The discounted forecast cash flows for years 2015 and onwards would be just enough to support the carrying value of the entity’s assets. However, 2014 is forecast to produce a loss and net cash outflow. The discounted value of this amount is accordingly written off […]

Identification of cash-generating units – grouping of assets Example A – A tour operator’s hotels A tour operator owns three hotels of a similar class near the beach at a large holiday resort. These hotels are advertised as alternatives in the operator’s brochure, at the same price. Holidaymakers are frequently transferred from one to another and there is a central booking system for independent travellers. […]

Reversal of impairment losses At the beginning of 2009 an entity acquires an asset with a useful life of 10 years for $1,000. The asset generates net cash inflows that are largely independent of the cash inflows of other assets or groups of assets. At the end of 2011, when the carrying amount after depreciation is $700, the entity recognises that there has been an […]

Identification of cash-generating units – internally-used products Example A – Plant for an Intermediate Step in a Production Process A significant raw material used for plant Y’s final production is an intermediate product bought from plant X of the same entity. X’s products are sold to Y at a transfer price that passes all margins to X. 60 per cent of X’s final production is […]

Allocation of corporate assets An entity comprises three CGUs and a headquarters building. The carrying amount of the headquarters building of 150 is allocated to the carrying amount of each individual cash-generating unit. A weighted allocation basis is used because the estimated remaining useful life of A’s cash-generating unit is 10 years, whereas the estimated remaining useful lives of B and C’s cash-generating units are […]

Unibail-Rodamco (2011) Consolidated Financial Statements [extract] 1.5 Asset valuation methods [extract] Investment properties (IAS 40) [extract] Since January 1, 2009, Investment Properties Under Construction (IPUC) are covered by IAS 40 and are eligible to be measured at fair value. In accordance with the Group”s investment properties valuation method, they are valued at fair value by an external appraiser. Projects for which the fair value is […]