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IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition by Thomas Muller-Marques Berger

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IPSAS 21: Impairment of Non-Cash-Generating Assets

Objective

The objective of IPSAS 21 is to prescribe the procedures that an entity applies to determine whether a non-cash-generating asset is impaired and to ensure that impairment losses are recognized. The standard also specifies when an entity would reverse an impairment loss and prescribes disclosures.

The IFRS on which the IPSAS is based

IAS 36, Impairment of Assets generally corresponds to IPSAS 21. However, as IPSAS 21 relates solely to non-cash-generating assets, IAS 36 and IPSAS 21 do not correspond in all respects.

Content

Principal definitions

Cash-generating assets are assets held with the primary objective of generating a commercial return. Non-cash-generating assets are assets not held with the primary objective of generating a commercial return (cf. IPSAS 21.14).

Depreciation (amortization) is the systematic allocation of the depreciable amount of an asset over its useful life.

IPSAS 21.14 states that impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset's future economic benefits or service potential through depreciation.

An impairment loss of a non-cash-generating asset is the amount by which the carrying amount of an asset exceeds its recoverable amount.

Recoverable service amount is the higher of a non-cash-generating asset's fair value less costs to sell and its value in use. Value in use of a non-cash-generating ...

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