Chapter 27


The purpose of the Standard is to ensure that assets are carried at no more than their recoverable amount. If an asset’s carrying value exceeds the amount that could be received through use or through selling the asset, then the asset is impaired and IAS 36 requires an entity to make provision for the impairment loss. IAS 36 also sets out the situations where an entity can reverse an impairment loss. Certain assets are not covered by the Standard, including
• Inventories (IAS 2)
• Assets arising from construction contracts (IAS 11)
• Deferred tax assets (IAS 12)
• Assets arising from employee benefits (IAS 19)
• Financial assets dealt with under IAS 39 or IFRS 9
• Investment property carried at fair value under IAS 40
• Biological assets carried at fair value (IAS 41)
• Assets arising from insurance contracts (IFRS 4)
• Assets that are held for sale (IFRS 5)
The Standard does apply to
• Subsidiaries, associates, and joint ventures
• Property, plant, and equipment
• Investment property carried at cost
• Intangible assets and goodwill
(in accordance with IAS 36)
Recoverable amount of an asset or a cash-generating unit. The higher of its fair value less costs to sell and its value in use.
Value-in-use. The discounted present value of the future cash flows expected to arise from an asset or a cash-generating unit.
Cash-generating unit. The smallest group of assets that can be identified that generates cash flows independently ...

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