Reversal limited to the cumulative loss

Learning objectives

• Calculate the reversal of an impairment loss, limited to the cumulative impairment loss previously recognised.L2, L3

Normative references

• IFRS 5 §21A gain is recognised for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognised (under IFRS 5 or previously under IAS 36).
• IFRS 5 §22Disposal group: a gain is recognised for any subsequent increase in its fair value less costs to sell, (a) to the extent that it has not been recognised in accordance with para. 19 and (b) not in excess of the cumulative impairment loss recognised, under IFRS 5 or previously under IAS 36, on the non-current assets within the measurement scope of IFRS 5.

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

3 questions

• Ivrane recognised last year a cumulative loss of {cumulative_loss} on a disposal group. This year, the group's fair value less costs to sell increases by {increase_in_fvlcts}. Calculate the gain to recognise and the part of the increase that is not recognised.L2
• A disposal group of Mérovel has borne a cumulative loss of {cumulative_loss}. At the closing, its fair value less costs to sell increases by {increase_in_fvlcts}. Post the entry for the gain.L3
• After an asset is classified as held for sale, its fair value less costs to sell increases. Within what limit is a gain recognised?L2