Standard shall be applied in accounting for the impairment of all assets except below
•Inventories (see Ind AS 2 Inventories);
•Assets arising from construction contracts (see Ind AS 11 Construction Contracts);
•Deferred tax assets (see Ind AS 12 Income Taxes);
•Assets arising from employee benefits (see Ind AS 19 Employee Benefits);
•Financial assets that are within the scope of Ind AS 39 Financial Instruments: Recognition and Measurement;
•Biological assets related to agricultural activity that are measured at fair value less costs to sell (see Ind AS 41 Agriculture1 );
•Deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of Ind AS 104 Insurance Contracts; and
•Non-current assets (or disposal groups) classified as held for sale in accordance with Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations.
•Value in Use = Net present value of cash flows arising out asset.
•Fair value less cost of disposal = sale proceeding – Cost of disposal at the time of impairment test
In case recoverable value is higher than carrying amount in the next cycle and gain should be credited to profit and loss account to that extent of charged earlier. And the balance gain should be ignored.
Covid 19 pandemic Impact
Short-term disruption may not indicate an impact on recoverability of reporting unit. However Management required to review the business disruption /significant future cash flow for recoverable computation
Note: Above article is just a short hand note for quick reference. Please refer the institute material for detailed information.
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