Boundary with IAS 36

Learning objectives

• Distinguish IAS 36 impairment before classification, the IFRS 5 loss after it, and the order of allocation borrowed from IAS 36.L3, L4

Normative references

• IFRS 5 §15Measurement: an asset (or disposal group) classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell (the starting carrying amount results from para. 18).
• IFRS 5 §23The impairment loss (or any subsequent gain) of a disposal group reduces (or increases) the carrying amount only of the non-current assets in the group within the measurement scope of IFRS 5, in the order of allocation set out in IAS 36 (paras 104(a) and (b) and 122); the other assets and the liabilities are not adjusted.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• A disposal group of Pyral includes goodwill of €50,000 and a machine of €150,000 (carrying amounts after prior remeasurement). Its carrying amount exceeds its fair value less costs to sell by €80,000. Case convention: the IAS 36 order applies (goodwill first, then the balance pro rata), with no other asset to share pro rata and no floor. How is the loss allocated?L4