Investment in associate - Impairment?

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yvonne
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Joined: 23 Jun 2020, 04:51

Investment in associate - Impairment?

Post by yvonne »

Hi everyone, would like to seek your advice on the case below:

All the investors have decided to close down an investee (recorded as an Associate in my book) voluntarily in the next financial year. Is this considered as an impairment indicator for the investment in associate in the current financial year?
JRSB
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Re: Investment in associate - Impairment?

Post by JRSB »

Is it being closed because it was a failure and has no value left, or perhaps for other reasons and you'll get a return of capital when it is closed down greater than your investment?
Leo
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Re: Investment in associate - Impairment?

Post by Leo »

Hi JRSB, what would be the accounting treatments in these two situations ?
yvonne
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Joined: 23 Jun 2020, 04:51

Re: Investment in associate - Impairment?

Post by yvonne »

JRSB wrote: 04 May 2022, 10:04 Is it being closed because it was a failure and has no value left, or perhaps for other reasons and you'll get a return of capital when it is closed down greater than your investment?
Hi JRSB, it's expected by my management that my company will not get any return/proceeds/cash flows back upon voluntary liquidation. So the Value In Use should be 0? And I assume I need not to determine its Fair Value Less Costs to Sell since the Associate is an unquoted equity investment?
Leo
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Re: Investment in associate - Impairment?

Post by Leo »

I would impair it, bring the carrying value to 0 according to IAS 36
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Marek Muc
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Re: Investment in associate - Impairment?

Post by Marek Muc »

You would need to determine fair value anyway, but if expected proceeds are close to nil then fair value probably won't be significant enough to bother. So I would too write off the whole investment
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