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Thread: 23 - Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28) - Impairment of Assets

  1. #31
    IND-AS
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    Thumbs up Appendix - C of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28) - Impairment of Assets

    Appendix - C of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28)

    Impairment of Assets


    Appendix - C

    Impairment testing cash-generating units with goodwill and non-controlling interests


    This appendix is an integral part of the Standard.

    C1. In accordance with Ind AS 103, the acquirer measures and recognises goodwill as of the acquisition date as the excess of (a) over (b) below:

    (a) the aggregate of:

    (i) the consideration transferred measured in accordance with Ind AS 103 , which generally requires acquisition-date fair value;
    (ii) the amount of any non-controlling interest in the acquiree measured in accordance with Ind AS 103; and
    (iii) in a business combination achieved in stages, the acquisition -date fair value of the acquirer’s previously held equity interest in the acquiree.
    (b) the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed measured in accordance with Ind AS 103.

    Allocation of goodwill

    C2. Paragraph 80 of this Standard requires goodwill acquired in a business combination to be allocated to each of the acquirer’s cash -generating units, or groups of cash-generating units, expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units, or groups of units. It is possible that some of the synergies resulting from a business combination will be allocated to a cash - generating unit in which the non-controlling interest does not have an interest.

    Testing for impairment

    C3. Testing for impairment involves comparing the recoverable amount of a cashgenerating unit with the carrying amount of the cash -generating unit.

    C4. If an entity measures non-controlling interests as its proportionate interest in the net identifiable assets of a subsidiary at the acquisition date, rather than at fair value, goodwill attributable to non-controlling interests is included in the recoverable amount of the related cash -generating unit but is not recognised in the parent’s consolidated financial statements. As a consequence, an entity shall gross up the carrying amount of goodwill allocated to the unit to include the goodwill attributable to the non-controlling interest. This adjusted carrying amount is then compared with the recoverable amount of the unit to determine whether the cash-generating unit is impaired.

    Allocating an impairment loss

    C5. Paragraph 104 requires any identified impairment loss to be allocated first to reduce the carrying amount of goodwill allocated to the unit and then to the other assets of the unit prorata on the basis of the carrying amount of each asset in the unit.

    C6. If a subsidiary, or part of a subsidiary, with a non -controlling interest is itself a cash-generating unit, the impairment loss is allocated between the parent and the non-controlling interest on the same basis as that on which profit or loss is allocated.

    C7. If a subsidiary, or part of a subsidiary, with a non -controlling interest is part of a larger cash-generating unit, goodwill impairment losses are allocated to the parts of the cash-generating unit that have a non-controlling interest and the parts that do not. The impairment losses should be allocated to the parts of the cash - generating unit on the basis of:

    (a) to the extent that the impairment relates to goodwill in the cash -generating unit, the relative carrying values of the goodwill of the parts before the impairment; and
    (b) to the extent that the impairment relates to identifiable assets in the cash - generating unit, the relative carrying values of the net identifiable assets of the parts before the impairment. Any such impairment is allocated to the assets of the parts of each unit prorata on the basis of the carrying amount of each asset in the part.

    In those parts that have a non-controlling interest, the impairment loss is allocated between the parent and the non-controlling interest on the same basis as that on which profit or loss is allocated.

    C8. If an impairment loss attributable to a non -controlling interest relates to goodwill that is not recognised in the parent’s consolidated financial statements (see paragraph C4), that impairment is not recognised as a goodwill impairment loss. In such cases, only the impairment loss relating to the goodwill that is allocated to the parent is recognised as a goodwill impairment loss.

    C9. Illustrative Example 7 of Appendix D illustrates the impairment testing of a non - wholly-owned cash-generating unit with goodwill.



  2. #32
    IND-AS
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    Thumbs up APPENDIX - D - Illustrative examples of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28) - Impairment of Assets

    APPENDIX - D - Illustrative examples of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28)

    Impairment of Assets


    APPENDIX - D

    Ind AS 36 Impairment of Assets Illustrative examples


    These examples accompany, but are not part of, Ind AS 36. All the examples assume that the entities concerned have no transactions other than those described. .

    For Illustrative examples you Can download this in pdf format

    Attached Files Attached Files

  3. #33
    IND-AS
    Guest

    Thumbs up Appendix -1 of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28) - Impairment of Assets

    Appendix -1 of Indian Accounting Standard (Ind AS) 36 - Earlier Accounting standard - (28)

    Impairment of Assets


    Appendix -1

    Comparison with IAS 36, Impairment of Assets

    Note: This appendix is not a part of the Indian Accounting Standard. The purpose of this Appendix is only to bring out the differences between Indian Accounting Standard (Ind AS) 36 and the corresponding International Accounting Standard (IAS) 3 6, Impairment of Assets issued by the International Accounting Standards Board.

    1. Paragraph 2(f) of IAS 36 states that the standard shall not be applied for accounting for the impairment of the investment property that is measured at fair value. Ind AS 36 does not specify so as Ind AS 40 permits the cost model only.

    2. The transitional provisions given in IAS 36 have not been given in Ind AS 36, since all transitional provisions related to Ind ASs, wherever considered appropriate have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards corresponding to IFRS 1, First-time Adoption of International Financial Reporting Standards.

    2. Different terminology is used, as used in existing laws e.g., the term ‘balance sheet’ is used instead of ‘Statement of financial position’ and ‘Statement of profit and loss’ is used instead of ‘Statement of comprehensive income’.

    3. Paragraphs 91-95 appear as ‘Deleted ‘in IAS 36. In order to maintain consistency with paragraph numbers of IAS 36, the paragraph numbers are retained in Ind AS 36.


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