What is IAS 36? Let us explain it!
What is IAS 36? You will read more in this article.
IAS 36 is an asset that should not be
carried in the financial statements at more than the highest amount to be
recovered through its use or sale. If the carrying amount exceeds the
recoverable amount, the asset is described as impaired. The entity must be
reduced as the carrying amount of the asset recover amount and recognise an
impairment loss. It also applies to groups of assets that do not really have cash
flows individually which is also known as cash-generating units. It applies to
all assets except those for which other Standards address impairment. The
exceptions include inventories, different tax assets, assets from employee
benefits, financial assets within the scope of IFRS 9, investment property that
is measured at fair value, biological assets within the scope of IAS 41, some
assets coming from insurance contracts, and non-current assets held for sale.
History of IAS 36
Here are some of its important dates:
- June 1998
- April 2001
- March 2004
- January 2008
- May 2013
On June 1998, the original IAS was issued
by the international accounting committee, but it is only in April 2001 the
International accounting standard board adopted the IAS 36 Impairment of
Assets. It consolidated the standard of the requirement on how to assess for
recoverability of an asset. This requirement was in the IAS 16 Property, Plant,
Equipment, IAS22Business Combinations, IAS 28 Accounting
for Associates, and IAS 31 Financial Reporting of Interests in
Joint Ventures.
The Board finally revised the IAS 36
in March 2004 as part of the first phase of its business combinations project.
In January 2008 the Board amended IAS36 again as part of the second phase
of its business combinations project. In May 2013 IAS36 was amended
byRecoverable Amount Disclosures for Non-Financial
Assets (Amendments to IAS 36). The amendments required the disclosure
of information about the recoverable amount of impaired assets if that amount
is based on fair value less costs of disposal and the disclosure of additional
information about that fair value measurement.
Listed below are some standards that made
some consequential amendments to IAS 36 too. They include:
- IFRS 10 Consolidated Financial
Statements which was issued in May2011 - IFRS 11 Joint
Arrangements which was issued May2011 - IFRS 13 Fair Value
Measurement which was issued in May 2011 - IFRS 9 Financial
Instruments or Hedge Accounting and amendments to IFRS 9, IFRS 7
and IAS 39 which was issued in November2013 - IFRS15 Revenue from Contracts
with Customerswhich was issued in May 2014 - Agriculture: Bearer Plantsor
Amendments to IAS16 and IAS 41 which was issued in June 2014 - IFRS 9 Financial
Instruments which was issued in July 2014 - IFRS 17 Insurance
Contracts which was issued in May2017 - Amendments to References to the Conceptual
Framework in IFRS Standards which was issued in March 2018 - Amendments to IFRS 17 which
was issued in June 2020.
IAS 36 on Annual Reporting
As you can see, this is an important
standard to the accounting role. We have informed you about what it is and its
history for you to understand the concept of it better. At Annual reporting
website we have explanations of other accounting standards from IFRS to IAS.
Did we inform you well? If you want more information, discover us at www.annualreporting.info.
