Please provide summary on Ind AS 36 - Impairment of Assets

The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and the Standard requires the entity to recognise an impairment loss. The Standard also specifies when an entity should reverse an impairment loss and prescribes disclosures. This Standard does not apply to inventories, assets arising from construction contracts, deferred tax assets, assets arising from employee benefits, or assets classified as held for sale (or included in a disposal group that is classified as held for sale) because Indian Accounting Standards applicable to these assets contain requirements for recognising and measuring these assets. This Standard does not apply to financial assets within the scope of Ind AS 109, or biological assets related to agricultural activity measured at fair value less costs to sell within the scope of Ind AS 41. However, this Standard applies to assets that are carried at revalued amount (ie fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses) in accordance with other Ind ASs, such as the revaluation model in Ind AS 16, Property

As per IND As issued by ICAI The basic principle of impairment is that an asset may not be carried on the balance sheet above its recoverable amount. Recoverable amount is defined as the higher of the asset’s fair value less costs of disposal and its value in use. Fair value less costs of disposal is the price that would be received to sell upon disposal of an asset in an orderly transaction between market participants at the measurement date, less costs of disposal. Guidance on fair valuing is given in Ind AS 113, ‘Fair value measurement’. Value in use requires management to estimate the future pre-tax cash flows to be derived from the asset and discount them using a pre-tax market rate that reflects current assessments of the time value of money and the risks specific to the asset. When considering whether an asset is impaired, both external indicators and internal indicators are considered. Recoverable amount is calculated at the individual asset level. However, an asset seldom generates cash flows independently of other assets, and most assets are tested for impairment in groups of assets described as cash-generating units (CGUs). A CGU is the smallest identifiable group of assets that generates inflows that are largely independent from the cash flows from other CGUs. The carrying value of an asset is compared to the recoverable amount (being the higher of value in use or fair value less costs of disposal). It is not always necessary to determine both an asset’s fair value less cost of disposal and its value in use. If either of these amounts exceeds the carrying amount, the asset is not impaired and it is not necessary to estimate the other amount. Goodwill acquired in a business combination is allocated to the acquirer’s CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination. However, the largest group of CGUs permitted for goodwill impairment testing is an operating segment before aggregation. An impairment loss recognised in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Please provide summary on Ind AS 36 - Impairment of Assets The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and the Standard requires the entity to recognise an impairment loss. The Standard also specifies when an entity should reverse an impairment loss and prescribes disclosures. This Standard does not apply to inventories, assets arising from construction contracts, deferred tax assets, assets arising from employee benefits, or assets classified as held for sale (or included in a disposal group that is classified as held for sale) because Indian Accounting Standards applicable to these assets contain requirements for recognising and measuring these assets. This Standard does not apply to financial assets within the scope of Ind AS 109, or biological assets related to agricultural activity measured at fair value less costs to sell within the scope of Ind AS 41. However, this Standard applies to assets that are carried at revalued amount (ie fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses) in accordance with other Ind ASs, such as the revaluation model in Ind AS 16, Property, Plant and Equipment and Ind AS 38, Intangible Assets.

Dear Friend > Ind AS 36 - Impairment of Assets The basic principle of impairment is that an asset may not be carried on the balance sheet above its recoverable amount. Recoverable amount is defined as the higher of the asset’s fair value less costs of disposal and its value in use. Fair value less costs of disposal is the price that would be received to sell upon disposal of an asset in an orderly transaction between market participants at the measurement date, less costs of disposal. Guidance on fair valuing is given in Ind AS 113, ‘Fair value measurement’. Value in use requires management to estimate the future pre-tax cash flows to be derived from the asset and discount them using a pre-tax market rate that reflects current assessments of the time value of money and the risks specific to the asset. When considering whether an asset is impaired, both external indicators and internal indicators are considered. Recoverable amount is calculated at the individual asset level. However, an asset seldom generates cash flows independently of other assets, and most assets are tested for impairment in groups of assets described as cash-generating units (CGUs). A CGU is the smallest identifiable group of assets that generates inflows that are largely independent from the cash flows from other CGUs. The carrying value of an asset is compared to the recoverable amount (being the higher of value in use or fair value less costs of disposal). It is not always necessary to determine both an asset’s fair value less cost of disposal and its value in use. If either of these amounts exceeds the carrying amount, the asset is not impaired and it is not necessary to estimate the other amount. Goodwill acquired in a business combination is allocated to the acquirer’s CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination. However, the largest group of CGUs permitted for goodwill impairment testing is an operating segment before aggregation. An impairment loss recognised in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period. Thanks