IAS 36 · Workpapers (Step 4 of 5)
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Impairment loss on an individual asset
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- Not reviewed — human review required
- Status
- Published
Objective of the workpaper
Calculate the carrying amount before the test, compare it with the recoverable amount, allocate the loss between profit or loss and other comprehensive income (revaluation surplus of the same asset only), record the entries and recalculate the depreciation of later periods.
9 sections · 27 blocks · 7 calculations · 3 entries
- IAS 36 §59
- IAS 36 §60
- IAS 36 §61
- IAS 36 §62
- IAS 36 §63
- IAS 36 §64
Work this workpaper as a mission
Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.
3 instances from the cases: the calculations and entries below are run by the calculation engine.
- File and entity
- Injection press: indications, recoverable amount and revised depreciation
- Case tasks documented here
- Calculate the carrying amount of the press and the impairment loss at 31 December 20X4.
- Calculate the depreciation charge for 20X5.
- Which entry do you record at 31 December 20X4?
- Which depreciation entry will you record in 20X5?
Inputs
InputsAsset impaired (nature, measurement model, date available for use)
TextRequired
Date of the test
DateRequired
20X4-12-31
Measurement model of the asset
ChoiceRequired
Cost model
Cost model / Revaluation model
Cost or revalued amount
NumberRequired
900,000
Accumulated depreciation
Number
360,000
Prior accumulated impairment
Number
Recoverable amount (Recoverable amount workpaper)
NumberRequired
480,000
Revaluation surplus available for this asset (0 under the cost model)
NumberRequired
0
Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
NumberRequired
0
Residual value
NumberRequired
0
Remaining useful life after the test
NumberRequired
6 years
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Recognition of the loss
AnalysisIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §62
Recognition rules applied
ChecklistRequired
- Asset reduced to its recoverable amount when lower than the carrying amount
- Cost model: loss recognised immediately in profit or loss
- Revalued asset: loss in OCI up to the surplus of the same asset, excess in profit or loss
- No liability for a loss exceeding the carrying amount, unless another standard requires it
Subsequent effects
AnalysisIAS 36 §63IAS 36 §64
Consequences for later periods
ChecklistRequired
- Depreciation recalculated on the impaired carrying amount over the remaining life
- Deferred tax reviewed under IAS 12 (new carrying amount and tax base)
Impairment loss, allocation and revised depreciation
CalculationsIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §63
Carrying amount before the test
CalculationRequired
540,000
Cost or revalued amount ; − Accumulated depreciation ; − Prior accumulated impairment
Impairment loss (carrying amount less recoverable amount, nil if negative)
CalculationRequired
60,000
Carrying amount before the test ; − Recoverable amount (Recoverable amount workpaper)
Part recognised in other comprehensive income (revaluation surplus of the same asset)
CalculationRequired
0
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Under the cost model the available surplus is nil: the whole loss goes to profit or loss (para. 60). The surplus of another asset never absorbs the loss (para. 61).
Part recognised in profit or loss
CalculationRequired
60,000
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Revaluation surplus remaining after the loss
CalculationRequired
0
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Carrying amount after impairment
CalculationRequired
480,000
Carrying amount before the test ; − Impairment loss (carrying amount less recoverable amount, nil if negative)
Revised annual depreciation (impaired carrying amount less residual value, over the remaining life)
CalculationRequired
80,000
Carrying amount after impairment ; Residual value ; Remaining useful life after the test
Journal entries
EntriesImpairment loss in profit or loss
Entry
Account Debit Credit Impairment loss 60,000 Accumulated impairment 60,000 Loss charged to the revaluation surplus
Entry
Debit Revaluation surplus (OCI) ← Part recognised in other comprehensive income (revaluation surplus of the same asset) ; Credit Accumulated impairment ← Part recognised in other comprehensive income (revaluation surplus of the same asset)
Depreciation for the first period after impairment
Entry
Account Debit Credit Depreciation expense 80,000 Accumulated depreciation 80,000
Conclusion
ConclusionConclusion on the loss, its allocation and the future charge
ConclusionRequired
Financial statement impact
FS impactImpact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the register)
References
Checks and financial statement impact
- The impairment loss is determined (nil if none)Pass
- The loss equals the sum of the OCI and profit or loss partsPass
- The profit or loss entry is balancedPass
- The revaluation surplus entry is balancedNot evaluated
- The depreciation entry is balancedPass
- Assets
- -140,000
- Liabilities
- 0
- Profit or loss
- -140,000
- OCI
- 0
- Equity
- -140,000
- File and entity
- Revalued asset: IAS 16 revaluation, then IAS 36 impairment loss and capped reversal
- Case tasks documented here
- Determine the recoverable amount at 31 December 20X2.
- Calculate the impairment loss under IAS 36 and its allocation at 31 December 20X2.
- Which impairment entries do you record at 31 December 20X2?
- Calculate the depreciation charge for 20X3.
- Which depreciation entry do you record in 20X3?
Inputs
InputsAsset impaired (nature, measurement model, date available for use)
TextRequired
Date of the test
DateRequired
20X2-12-31
Measurement model of the asset
ChoiceRequired
Revaluation model
Cost model / Revaluation model
Cost or revalued amount
NumberRequired
1,520,000
Accumulated depreciation
Number
0
Prior accumulated impairment
Number
Recoverable amount (Recoverable amount workpaper)
NumberRequired
1,406,000
Revaluation surplus available for this asset (0 under the cost model)
NumberRequired
20,000
Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
NumberRequired
0
Residual value
NumberRequired
0
Remaining useful life after the test
NumberRequired
19 years
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Recognition of the loss
AnalysisIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §62
Recognition rules applied
ChecklistRequired
- Asset reduced to its recoverable amount when lower than the carrying amount
- Cost model: loss recognised immediately in profit or loss
- Revalued asset: loss in OCI up to the surplus of the same asset, excess in profit or loss
- No liability for a loss exceeding the carrying amount, unless another standard requires it
Subsequent effects
AnalysisIAS 36 §63IAS 36 §64
Consequences for later periods
ChecklistRequired
- Depreciation recalculated on the impaired carrying amount over the remaining life
- Deferred tax reviewed under IAS 12 (new carrying amount and tax base)
Impairment loss, allocation and revised depreciation
CalculationsIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §63
Carrying amount before the test
CalculationRequired
1,520,000
Cost or revalued amount ; − Accumulated depreciation ; − Prior accumulated impairment
Impairment loss (carrying amount less recoverable amount, nil if negative)
CalculationRequired
114,000
Carrying amount before the test ; − Recoverable amount (Recoverable amount workpaper)
Part recognised in other comprehensive income (revaluation surplus of the same asset)
CalculationRequired
20,000
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Under the cost model the available surplus is nil: the whole loss goes to profit or loss (para. 60). The surplus of another asset never absorbs the loss (para. 61).
Part recognised in profit or loss
CalculationRequired
94,000
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Revaluation surplus remaining after the loss
CalculationRequired
0
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Carrying amount after impairment
CalculationRequired
1,406,000
Carrying amount before the test ; − Impairment loss (carrying amount less recoverable amount, nil if negative)
Revised annual depreciation (impaired carrying amount less residual value, over the remaining life)
CalculationRequired
74,000
Carrying amount after impairment ; Residual value ; Remaining useful life after the test
Journal entries
EntriesImpairment loss in profit or loss
Entry
Account Debit Credit Impairment loss 94,000 Accumulated impairment 94,000 Loss charged to the revaluation surplus
Entry
Account Debit Credit Revaluation surplus (OCI) 20,000 Accumulated impairment 20,000 Depreciation for the first period after impairment
Entry
Account Debit Credit Depreciation expense 74,000 Accumulated depreciation 74,000
Conclusion
ConclusionConclusion on the loss, its allocation and the future charge
ConclusionRequired
Financial statement impact
FS impactImpact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the register)
References
Checks and financial statement impact
- The impairment loss is determined (nil if none)Pass
- The loss equals the sum of the OCI and profit or loss partsPass
- The profit or loss entry is balancedPass
- The revaluation surplus entry is balancedPass
- The depreciation entry is balancedPass
- Assets
- -188,000
- Liabilities
- 0
- Profit or loss
- -168,000
- OCI
- -20,000
- Equity
- -188,000
- File and entity
- Professional file: annual impairment review of an industrial group
- Case task documented here
- Calculate the reversal of the impairment loss of line M7 and its future depreciation.
Inputs
InputsAsset impaired (nature, measurement model, date available for use)
TextRequired
Date of the test
DateRequired
20X3-12-31
Measurement model of the asset
ChoiceRequired
Cost model
Cost model / Revaluation model
Cost or revalued amount
NumberRequired
1,200,000
Accumulated depreciation
Number
360,000
Prior accumulated impairment
Number
Recoverable amount (Recoverable amount workpaper)
NumberRequired
560,000
Revaluation surplus available for this asset (0 under the cost model)
NumberRequired
0
Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
NumberRequired
0
Residual value
NumberRequired
0
Remaining useful life after the test
NumberRequired
7 years
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Recognition of the loss
AnalysisIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §62
Recognition rules applied
ChecklistRequired
- Asset reduced to its recoverable amount when lower than the carrying amount
- Cost model: loss recognised immediately in profit or loss
- Revalued asset: loss in OCI up to the surplus of the same asset, excess in profit or loss
- No liability for a loss exceeding the carrying amount, unless another standard requires it
Subsequent effects
AnalysisIAS 36 §63IAS 36 §64
Consequences for later periods
ChecklistRequired
- Depreciation recalculated on the impaired carrying amount over the remaining life
- Deferred tax reviewed under IAS 12 (new carrying amount and tax base)
Impairment loss, allocation and revised depreciation
CalculationsIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §63
Carrying amount before the test
CalculationRequired
840,000
Cost or revalued amount ; − Accumulated depreciation ; − Prior accumulated impairment
Impairment loss (carrying amount less recoverable amount, nil if negative)
CalculationRequired
280,000
Carrying amount before the test ; − Recoverable amount (Recoverable amount workpaper)
Part recognised in other comprehensive income (revaluation surplus of the same asset)
CalculationRequired
0
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Under the cost model the available surplus is nil: the whole loss goes to profit or loss (para. 60). The surplus of another asset never absorbs the loss (para. 61).
Part recognised in profit or loss
CalculationRequired
280,000
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Revaluation surplus remaining after the loss
CalculationRequired
0
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Carrying amount after impairment
CalculationRequired
560,000
Carrying amount before the test ; − Impairment loss (carrying amount less recoverable amount, nil if negative)
Revised annual depreciation (impaired carrying amount less residual value, over the remaining life)
CalculationRequired
80,000
Carrying amount after impairment ; Residual value ; Remaining useful life after the test
Journal entries
EntriesImpairment loss in profit or loss
Entry
Account Debit Credit Impairment loss 280,000 Accumulated impairment 280,000 Loss charged to the revaluation surplus
Entry
Debit Revaluation surplus (OCI) ← Part recognised in other comprehensive income (revaluation surplus of the same asset) ; Credit Accumulated impairment ← Part recognised in other comprehensive income (revaluation surplus of the same asset)
Depreciation for the first period after impairment
Entry
Account Debit Credit Depreciation expense 80,000 Accumulated depreciation 80,000
Conclusion
ConclusionConclusion on the loss, its allocation and the future charge
ConclusionRequired
Financial statement impact
FS impactImpact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the register)
References
Checks and financial statement impact
- The impairment loss is determined (nil if none)Pass
- The loss equals the sum of the OCI and profit or loss partsPass
- The profit or loss entry is balancedPass
- The revaluation surplus entry is balancedNot evaluated
- The depreciation entry is balancedPass
- Assets
- -360,000
- Liabilities
- 0
- Profit or loss
- -360,000
- OCI
- 0
- Equity
- -360,000
Inputs
InputsAsset impaired (nature, measurement model, date available for use)
TextRequired
Date of the test
DateRequired
Measurement model of the asset
ChoiceRequired
Cost model / Revaluation model
Cost or revalued amount
NumberRequired
Accumulated depreciation
Number
Prior accumulated impairment
Number
Recoverable amount (Recoverable amount workpaper)
NumberRequired
Revaluation surplus available for this asset (0 under the cost model)
NumberRequired
Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
NumberRequired
Residual value
NumberRequired
Remaining useful life after the test
NumberRequired
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Recognition of the loss
AnalysisIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §62
Recognition rules applied
ChecklistRequired
- Asset reduced to its recoverable amount when lower than the carrying amount
- Cost model: loss recognised immediately in profit or loss
- Revalued asset: loss in OCI up to the surplus of the same asset, excess in profit or loss
- No liability for a loss exceeding the carrying amount, unless another standard requires it
Subsequent effects
AnalysisIAS 36 §63IAS 36 §64
Consequences for later periods
ChecklistRequired
- Depreciation recalculated on the impaired carrying amount over the remaining life
- Deferred tax reviewed under IAS 12 (new carrying amount and tax base)
Impairment loss, allocation and revised depreciation
CalculationsIAS 36 §59IAS 36 §60IAS 36 §61IAS 36 §63
Carrying amount before the test
CalculationRequired
Cost or revalued amount ; − Accumulated depreciation ; − Prior accumulated impairment
Impairment loss (carrying amount less recoverable amount, nil if negative)
CalculationRequired
Carrying amount before the test ; − Recoverable amount (Recoverable amount workpaper)
Part recognised in other comprehensive income (revaluation surplus of the same asset)
CalculationRequired
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Under the cost model the available surplus is nil: the whole loss goes to profit or loss (para. 60). The surplus of another asset never absorbs the loss (para. 61).
Part recognised in profit or loss
CalculationRequired
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Revaluation surplus remaining after the loss
CalculationRequired
Carrying amount before the test ; Recoverable amount (Recoverable amount workpaper) ; Revaluation surplus available for this asset (0 under the cost model) ; Prior decreases recognised in profit or loss (no effect on a loss; 0 if none)
Carrying amount after impairment
CalculationRequired
Carrying amount before the test ; − Impairment loss (carrying amount less recoverable amount, nil if negative)
Revised annual depreciation (impaired carrying amount less residual value, over the remaining life)
CalculationRequired
Carrying amount after impairment ; Residual value ; Remaining useful life after the test
Journal entries
EntriesImpairment loss in profit or loss
Entry
Debit Impairment loss ← Part recognised in profit or loss ; Credit Accumulated impairment ← Part recognised in profit or loss
Loss charged to the revaluation surplus
Entry
Debit Revaluation surplus (OCI) ← Part recognised in other comprehensive income (revaluation surplus of the same asset) ; Credit Accumulated impairment ← Part recognised in other comprehensive income (revaluation surplus of the same asset)
Depreciation for the first period after impairment
Entry
Debit Depreciation expense ← Revised annual depreciation (impaired carrying amount less residual value, over the remaining life) ; Credit Accumulated depreciation ← Revised annual depreciation (impaired carrying amount less residual value, over the remaining life)
Conclusion
ConclusionConclusion on the loss, its allocation and the future charge
ConclusionRequired
Financial statement impact
FS impactImpact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the register)
References