Ias 36 question - impairment

[JBHF]

Hi All

I have 3 questions on how to handle impairment.

Question 1.
I understand that that before applying the impairment loss on pro-rata basis to other components of CGU, we need to allocate it to goodwill first. My question is about corporate asset, should corporate assets be impaired second-after goodwill, and the the rest on the pro rata basis, OR the corporate is included in the "other" asset and impaired together on pro rata basis along with all others?

Question 2.
Let's say I have impaired off all the goodwill, now I am going to do it on other PPEs, so instead of crediting asset one by one, is it allowed to credit accumulated impairment at a high level instead? It's easier

Question 3.
If crediting "accumulated impairment" is not allowed, should we impair those one by one from asset register level? As I understand, impairment loss is recognized from the group level, but to impair those assets, shouldn't we go to the individual asset (from asset register) from subsidiary level because that's where the asset in question registered.

[Ketan Marwah]

Hi JBFH,

Try referring this to get better understanding:

https://ifrscommunity.com/knowledge-bas ... -of-losses

Let me still try and help you with your questions:

Q1: You must first and foremost ensure that CGUs with impairment indications are tested prior to allocating corporate assets and goodwill. If there’s an indication of impairment for a CGU within a group that includes goodwill, the affected CGU is tested first. The corporate asset upon having been allocated becomes just “another asset”.

Q2: No, refer IAS 36.104(b).

Q3: Shared link will help but answering in general, apply bottom up approach meaning start with the lowest level I.e. Tangible and finite-lived intangible assets are tested at the individual asset level unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. In that case, the test is carried out at the CGU level based on the same criteria for indefinite-lived intangible assets.

[JBHF]

Hi JBFH,

So if the CGU (let's say has 10 assets within it) is impaired, we only need to apply the impairment at the CGU level, in this case, we don't need to go into each of the individual asset within that CGU and apply the impairment one by one, but just recognize the credit as "accumulated impairment" from the group level, correct?

[Ketan Marwah]

Hi,

How did you form that understanding from my response? There is no accumulated impairment concept. Please spend some time reading the linked page and revert back if you have doubts still:

https://ifrscommunity.com/knowledge-bas ... units-cgu/

[Marek Muc]

It is difficult to get a man to understand something, when his workload will be much lower if he doesn't understand it

* Inspired by https://quoteinvestigator.com/2017/11/30/salary/