Impairment Loss – NBC Institute

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

Question

Maranathan Plc acquired a property for N4 million with annual depreciation on a straight-line basis at 7.5%. An impairment loss of N350,000 was recognized as of May 31, 2013, with accumulated depreciation at N1 million. The property was classified as held for sale on October 1, 2013, with fair value less costs to sell of N2.4 million. In December 2013, interim financials reported an improved fair value less costs to sell of N2.52 million. By May 31, 2014, fair value increased to N2.95 million, and the property was eventually sold on June 5, 2014, for N3 million.

Required:

a. Assess these transactions per IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. (5 Marks)
b. Evaluate the impact of events on the property over time and on reported gain per IAS 10 Events After the Reporting Period. (10 Marks)

Answer

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Tags: Depreciation, Disposal Gain, Held for Sale, Impairment Loss, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

Question

The following information relates to individual plant and equipment used by Phonex Nigeria Limited for its telecommunication operations as at December 31, 2014.

Plant and Equipment	Carrying Amount (N’000)	Fair Value less cost to sell (N’000)	Value in use (N’000)
1. Mast	297,500	302,500	285,000
2. Generators	592,500	517,500	512,500
3. Computer equipment	287,500	292,500	307,500
4. Credit card machines	207,500	187,500	197,500
5. Motor vehicles	77,500	65,000	–

Additional information:

i. The Mast and the Generator are carried at revalued amounts, and the cumulative revaluation surplus in other comprehensive income for the equipment are N30,000,000 and N15,000,000, respectively.

ii. The motor vehicles are buses used for transporting employees in the morning and evening, and it is not possible to determine the value in use of the buses separately because the buses do not generate cash inflows from continuing use that are independent of the cash flows from other assets.

Required:
Draft a memo addressed to your boss indicating whether each of the plant and equipment is impaired or not and also explaining how the impairment loss should be treated in the books of Phonex Nigeria Limited as at December 31, 2014.

Answer

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Tags: Assets, Financial Reporting, IAS 36, Impairment, Impairment Loss, Plant and Equipment
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2015

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

Question

The Board of directors of Adamu Limited has decided to dispose of a group of held-for-sale assets. The extracts of carrying amounts of the assets immediately before classification as held-for-sale were stated as follows:

Assets	N’000
Goodwill	80,000
PPE at revalued amounts	208,000
PPE at cost	320,000
Inventory	84,000
Financial asset	68,000

Total: 760,000

The Board estimated that the fair value of the disposal group is N650,000,000 gross, with selling costs amounting to N10,000,000.

Required:
i. Explain what is meant by disposal group and the rules of recognition under IFRS 5 – Non-current assets held for sale and discontinued operations. (2 Marks)

ii. Determine and allocate the impairments on the disposed-off asset under IFRS 5. (4 Marks)

iii. Prepare necessary journal entries to record the transactions. (1 Mark)

iv. Identify THREE applicable criteria under IFRS 5 for classifying an asset or disposal group as held for sale in the financial statements. (3 Marks)

Answer

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Tags: Disposal group, IFRS 5, Impairment Loss, Journal Entries, Recognition Criteria
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2020

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

Question

Under IAS 36 – Impairments of Assets:

Required:

To briefly explain how an entity should identify and account for the impairment of assets.

Answer

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Tags: IAS 36, Impairment, Impairment Loss, Recoverable Amount
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2021

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

Question

In accordance with IAS 16 (Property, Plant and Equipment), the amount by which the carrying amount of an asset exceeds its recoverable amount is called ____________.

Answer

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Tags: Asset Valuation, IAS 16, Impairment Loss
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2013

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Disposal Gain, Held for Sale, Impairment Loss, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

Question

The following information relates to individual plant and equipment used by Phonex Nigeria Limited for its telecommunication operations as at December 31, 2014.

Plant and Equipment	Carrying Amount (N’000)	Fair Value less cost to sell (N’000)	Value in use (N’000)
1. Mast	297,500	302,500	285,000
2. Generators	592,500	517,500	512,500
3. Computer equipment	287,500	292,500	307,500
4. Credit card machines	207,500	187,500	197,500
5. Motor vehicles	77,500	65,000	–

Additional information:

i. The Mast and the Generator are carried at revalued amounts, and the cumulative revaluation surplus in other comprehensive income for the equipment are N30,000,000 and N15,000,000, respectively.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assets, Financial Reporting, IAS 36, Impairment, Impairment Loss, Plant and Equipment
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2015

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

Question

Assets	N’000
Goodwill	80,000
PPE at revalued amounts	208,000
PPE at cost	320,000
Inventory	84,000
Financial asset	68,000

Total: 760,000

The Board estimated that the fair value of the disposal group is N650,000,000 gross, with selling costs amounting to N10,000,000.

Required:
i. Explain what is meant by disposal group and the rules of recognition under IFRS 5 – Non-current assets held for sale and discontinued operations. (2 Marks)

ii. Determine and allocate the impairments on the disposed-off asset under IFRS 5. (4 Marks)

iii. Prepare necessary journal entries to record the transactions. (1 Mark)

iv. Identify THREE applicable criteria under IFRS 5 for classifying an asset or disposal group as held for sale in the financial statements. (3 Marks)

Answer

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Tags: Disposal group, IFRS 5, Impairment Loss, Journal Entries, Recognition Criteria
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2020

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

Question

Under IAS 36 – Impairments of Assets:

Required:

To briefly explain how an entity should identify and account for the impairment of assets.

Answer

Find Related Questions by Tags, levels, etc.

Tags: IAS 36, Impairment, Impairment Loss, Recoverable Amount
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2021

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

Question

In accordance with IAS 16 (Property, Plant and Equipment), the amount by which the carrying amount of an asset exceeds its recoverable amount is called ____________.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, IAS 16, Impairment Loss
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: NOV 2013

Question Tag: Impairment Loss

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CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

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CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

You're reporting an error for "CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)"

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

You're reporting an error for "FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)"

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

You're reporting an error for "FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)"

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

You're reporting an error for "FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)"

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)"

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

You're reporting an error for "CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)"

FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)

Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.

You're reporting an error for "FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)"

FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)

Explain disposal group and rules of recognition under IFRS 5, determine impairment loss, and allocate impairment on the assets.

You're reporting an error for "FR – Nov 2020 – L2 – Q5c – Impairment of Assets (IAS 36)"

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

You're reporting an error for "FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)"

FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)

Understanding the term for when the carrying amount of an asset exceeds its recoverable amount under IAS 16.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q36 – Accounting for Property, Plant, and Equipment (IAS 16)"

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