IAS 36 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Reversal of an impairment loss
Revalued asset: IAS 16 revaluation, then IAS 36 impairment loss and capped reversal
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 36 workpaper
- Level
- Advanced
- Estimated time
- ≈ 40 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Cité des Congrès de Loire (a fictitious company) operates an auditorium that it measures under the revaluation model. The last revalued amount dates from 31 December 20X1. Data and methods chosen by the entity: it does not transfer the revaluation surplus to retained earnings as the asset is depreciated and, on a revaluation, it eliminates the accumulated depreciation against the gross carrying amount (a method it chose among those IAS 16 permits). Teaching assumption: tax effects are ignored. You are involved in the 20X2 and 20X3 year-ends.
Assignment
Workpaper Reversal of an impairment loss.
Purpose of the workpaper
Check that there is an indication of reversal and a change in estimates (not only the unwinding of the discount), cap the carrying amount at the amount that would have existed without the prior loss, allocate the reversal between profit or loss and other comprehensive income according to the history of the asset, record it and recalculate the future charge. A goodwill loss is never reversed.
Questions of the file covered by this workpaper
- Is a reversal justified at 31 December 20X3?
- Determine the recoverable amount and the cap on the reversal at 31 December 20X3.
- Calculate the reversal and its allocation.
- Which reversal entries do you record at 31 December 20X3?
- Calculate the depreciation charge for 20X4.
Documents in the file
Open the documents to pick out the relevant information.