2 Why focus on impairment now? The implications brought on by COVID-19 could have a significant impact on performance and future cashflow of business assets. Non-financial assets Impairment under IAS 36 Impairment of assets Many businesses will have to consider the potential impairment of non-financial assets. Accounting for Impaired Assets . Improving impairment disclosures for non-financial assets 06 November 2019 In October 2019, the FRC published a thematic review of impairment disclosures provided by a sample of listed companies. Goodwill however requires an annual impairment assessment under IAS 36 regardless of the presence of indicators. Impairment of non-financial assets. Non-financial assets, often significant company assets, provide vital information on a range of company valuation and performance metrics for investors. 4 May 2020. 10/14/2020 12 INTANGIBLE ASSETS • Cash flows and assumptions are reasonable having regard to matters such as historical cash flows, economic and market conditions, and funding costs. property, plant & equipment, investment properties, biological assets) be tested for impairment when there is an indication of impairment at the reporting date. For non-financial assets like tangible assets and intellectual property, IAS 36, ‘Impairment of assets’, / FRS 102 Section 27 require management to consider at each report date whether there is any indication that a non-financial asset may be impaired. Impairment of Leasehold Improvement In 2013-14 leasehold fitout was impaired to the value of $2,179,000 as a result of identified surplus leased space and closures in regional offices. Impairment charges for ASX 50 companies were $38 billion in the year to June 2016 – more than double the 2015 amount and the highest since the 2008 GFC, KPMG data shows. Indicators of impairment . The total dollar value of an impairment is the difference between the asset’s carrying cost and the lower market value of the item. Impairment is recognized by reducing the book value of the asset in the balance sheet and recording impairment loss in the income statement.. The KPMG IFRS Institute is pleased to announce a webcast on Thursday, October 8, Refresh on Impairment of non-financial assets. AASB 136 Impairment of Assets also requires that other non-financial assets (e.g. of Professional Practice, KPMG US +1 212-909-5455 ‹ › Required fields. ASIC releases guidance on impairment of non-financial assets. Currently, there is a lack of Canadian guidance on the impairment of non-financial assets that have service potential. Paragraphs in bold type state the main principles. Where there are indicators of impairment, an impairment review will be required. Impairment of Assets. It has conducted a Thematic Review - Impairment of non-financial assets to look at compliance with the disclosure requirements in IFRS and commentary in the strategic report. The review identified instances of better practice but also a number of common disclosure omissions and opportunities to clarify and enhance disclosures. ASPE - IFRS: A Comparison | Impairment of Non-Financial Assets 4 Under ASPE, testing for impairment is a two-step process: Compare the carrying value of the asset group to the expected undiscounted cash flows. Kevin Manson. Requirements for PPE Ind AS 36, Impairment of Assets is applied to the individual assets. Download now ‹ › Required fields. Impairment of non-financial assets. Property, plant and equipment of $25,000 is made up of $12,000 which relates to the core Department which is the result of assets impaired through the physical stocktake and $13,000 for the TGA. observations on impairment testing of non-financial assets that can be used to identify issues for the 30 June 2017 financial reporting season. Australian Accounting Standard AASB 136 Impairment of Assets (ass amended) is set out in paragraphs 1 – Aus141.2 and Appendices A and C – E. All the paragraphs have equal authority. We recently issued In brief 2015-02 ‘Top 5 tips for impairment reviews of non-financial assets’. of Professional Practice, KPMG US +1 212-954-6442 ‹ › Required fields. Impairment of non-financial assets : Impairment of property, plant and equipment (fair value) — refer to Note 3 — 2 340.8 : Impairment of property, plant and equipment (book value) — refer to Note 3: 1.8: 21.5 : Impairment of mineral rights (fair value) — refer to Note 4 — 690.1 : Impairment of goodwill — refer to Note 5 — 1 411.8 This 60-minute live IFRS webcast provides an overview of the impairment model under IAS 36 and consideration of each of the steps in the IFRS impairment test. applies to a variety of non-financial assets including property, plant and equipment, right-of-use assets, intangible assets and goodwill, investment properties measured at cost and investments in associates and joint ventures. Email Me. disclosures relating to the impairment of non-financial assets to identify and encourage more transparent reporting of the: • events and circumstances that led to the recognition or reversal of an impairment loss; and • basis on which the directors concluded that the carrying amounts of non-financial assets are recoverable. Impairment of non-financial assets Apr 28, 2020. Balance Sheet Impairment of non-financial assets The impact of Covid-19 may call for some entities to conduct impairment evaluation on top of the requirement of impairment test to be performed at least annually on goodwill, intangible assets with indefinite useful lives and yet to be available for use under IAS 36 (Deloitte 2020). Assets … If there is an indication of impairment, or at least annually, all indefinite life intangible assets and goodwill are assessed for impairment unless stated otherwise. The KPMG IFRS Institute is pleased to announce a webcast on Thursday, October 8, Refresh on Impairment of non-financial assets. Email Me. On April 28, 2020, the Accounting Standards Board (AcSB) released a publication on the implications of COVID-19 on the impairment of non-financial assets. 23 October 2020 (Friday), 9am. We invite students and faculty members to this free webinar. that the non-financial assets are not impaired? Impairment testing of non-financial assets. Review the publication … 2 [IAS 36.2, 4] IAS 36 requires goodwill and indefinite-lived intangible assets to be tested for News Staff Reporter 11 June 2015 — 1 minute read. This webcast also highlights some of the key differences between IFRS and US GAAP related to impairment … Furthermore, impairment continues to be an area of concern for regulators as they push for increased transparency in disclosures. Email Me. IMPAIRMENT OF NON-FINANCIAL ASSETS ISSUE TO CONSIDER: LIABILITY LIMITED BY A SCHEME APPROVED UNDER PROFESSIONAL STANDARDS LEGISLATION. ASIC has this week released new guidance to assist directors and audit committees in considering whether the value of non-financial assets shown in a company’s financial report continues to be supportable. Impairment of Non-financial Assets. Intangible assets that have an indefinite useful life, such as goodwill, are not amortized on a scheduled basis, but are subjected to an annual impairment test. Impairment of a fixed asset refers to an abrupt decrease in the economic benefits that an asset can generate due to damage, obsolescence etc. Particularly where prior period cash flow … However, asset impairment can occur at any time, for a number of reasons. Impairment of non-financial assets – property, plant and equipment, identifiable intangible assets and goodwill. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Enhanced audit reports. Entities will need to make assessments on the recoverability of its assets in light of the issues caused by the coronavirus pandemic. Falling commodity prices triggered heavy asset writedowns in … Non-financial assets Impairment under AASB 136 Impairment of assets Many businesses will have to consider the potential impairment of non-financial assets. Nick Burgmeier. Impairment can occur as the result of an unusual or one-time event, such as a change in legal or economic conditions, change in consumer demands, or damage that impacts an asset. The largest number of inquiries continue to relate to impairment of non-financial assets and inappropriate accounting treatments. As part of the impairment testing of non-financial assets with definite useful life in the preparation of their future annual financial reports, we expect issuers’ assessment of an indication of impairment to be consistent with their analysis of the impacts of the COVID-19 pandemic in the financial report and that this assessment is clearly explained. This webcast also highlights some of the key differences between IFRS and US GAAP related to impairment … What does FRS 102 say? Senior Manager, Dept. Partner, Dept. Impairment of Non-Financial Assets ; Public Sector Accounting Standards. This article focusses on the disclosure requirements for PPE, intangibles and investment in subsidiaries, associates and joint ventures. This publication provides an overview of the implications and includes a list of helpful resources to support you as you navigate your impairment assessment. IAS 36 requires that goodwill and indefinite lived intangible assets are tested for impairment at a minimum every year and other non-financial assets whenever there is an indicator that those assets might be impaired. Examples of such events are given in Appendix A to IFRS 9 in the definition of credit-impaired financial assets and include significant financial difficulty of the borrower and breach of contract terms (e.g. This 60-minute live IFRS webcast provides an overview of the impairment model under IAS 36 and consideration of each of the steps in the IFRS impairment test. An essence of impairment of the non-financial assets and the methods of measurement thereof evaluation are formulated according to IPSAS 21 and IPSAS 26. Directors and auditors should continue to focus on values of assets and accounting policy choices in 31 December 2019 financial reports. Furthermore, an assessment is made at every balance sheet date to determine whether there are any indications that the asset could be impaired. Updated: FAQs on the impairment of goodwill and long-lived assets as a result of COVID-19. For 30 June 2017 financial reports, directors and audit committees should be referring to ASIC’s Information Sheet 203 Impairment of non-financial assets: Materials for directors to assist when considering the value of non-financial assets in the company’s balance sheet.. Clarity in financial reporting Focusing on impairment issues for June 2017 For more information following websites: www.iasplus.com www.deloitte.com A&A Accounting Technical May 2017 . Overview; Project Listing; Documents for Comment; Effective Dates for New Standards; Plain Language Resources; Back to projects Impairment of Non-Financial Assets Summary.