CERTYNEX IFRS ACADEMY

Xantela is fulfilling a waste treatment contract that has become onerous using an incinerator that it also uses for other customers. Management control proposes three approaches. Which one complies with the standard?

Provide for the total loss on the contract, then test the incinerator next year.

First test the incinerator under IAS 36, recognise any impairment loss, then provide for the balance.

Provide nothing, as the incinerator is also used for other, profitable customers.

Impair the incinerator by the total loss on the contract, without a provision.