Write-down loss on classification

Learning objectives

• Calculate and recognise the impairment loss on an initial or subsequent write-down to fair value less costs to sell.L2, L3

Normative references

• IFRS 5 §20An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell, to the extent that it has not already been recognised in accordance with para. 19. Its recognition in profit or loss follows from paras 37 and 33.
• IFRS 5 §37Outside a discontinued operation, gains and losses on remeasurement of assets (or disposal groups) held for sale are included in profit or loss from continuing operations.

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

4 questions

• Sovrel classifies a building as held for sale. Its carrying amount is {carrying_amount}. Case assumption: its fair value is {fair_value} and the costs to sell are estimated at {costs_to_sell}. Calculate the measured amount and the impairment loss to recognise.L2
• Treval has just classified a group as held for sale. Its carrying amount, after prior remeasurement, is {carrying_amount} and its fair value less costs to sell is {fair_value_less_costs_to_sell}. Post the entry recognising the impairment loss.L3
• When an asset is brought down to its fair value less costs to sell, the impairment loss is recognised in profit or loss.L2
• Calvane classifies a warehouse as held for sale and writes it down to its fair value less costs to sell, which results in an impairment loss of 80,000. Case data: the warehouse is not part of a discontinued operation. Where is this loss presented?L2