CERTYNEX IFRS ACADEMY

Kervela operates a depot measured at cost with a carrying amount of 40,000. Its estimates show that the calculated impairment loss would reach 55,000, as the depot is expected to generate net cash outflows. No other standard requires a liability to be recognised in this situation (given). How should this situation be treated?

Recognise a loss of 55,000: reduce the depot to zero and recognise a liability of 15,000

Recognise a loss of 40,000 in profit or loss; the depot is reduced to zero, with no liability

Recognise nothing, as a negative value has no economic meaning for an asset

Charge 40,000 to equity and recognise a provision of 15,000 as an expense, to smooth the effect on profit