IPSAS 26: Impairment of Cash-Generating Assets


The objective of IPSAS 26 is to prescribe the procedures that an entity applies to determine whether a cash-generating asset is impaired and to ensure that impairment losses are recognized. The standard also specifies when an entity should reverse an impairment loss and prescribes the necessary disclosures.

The IFRS on which the IPSAS is based

IAS 36, Impairment of Assets generally corresponds to IPSAS 26. However, because IPSAS 26 relates solely to cash-generating assets, IAS 36 and IPSAS 26 do not correspond in full.


Principal definitions

Cash-generating assets are assets held with the primary objective of generating a commercial return.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

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

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

Value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life.


IPSAS 26 applies to all cash-generating ...

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