The fair value of any of the assets of a commercial company cannot be static. Some assets under the influence of macroeconomic factors are becoming more expensive, while others pass the impairment process over time. IN the general sense The concept of impairment of an asset is a multistage process of reducing its financial and economic potential, reduce its liquidity and profitability over the size of the cheapening as a result of depreciation and inflation factors. This leads to the fact that the accounting value of the asset may exceed the theoretical value of the reimbursement, which is supposed to be obtained from the sale of this asset on the fair value market.
In order for the companies to test their assets on impairment and correctly display these processes in their financial statements, IAS 36 IAS 36 applied standard was developed, which will be discussed in this article.
IAS 36 - General Information
The IFRS 36 standard is developed as a regulation that determines the procedure for taking into account the assets of a commercial company in such a way that the amount of the accounting balance sheet assessment does not exceed the fair value of the asset value. At the same time exceeding balance value It is customary to recognize not only the excess of the value of the sale, but also exceeding the aggregate size of economic benefits and income that the company may be derived from the use of this asset. When there is such a moment about the financial value of the asset, such an event indicates that the asset depreciated, and then in accordance with IAS 36, the company should reflect his impairment loss (UO).
The IAS 36 standard is used to assess / account for impairment of all assets of a commercial company, regardless of the type and market of use, with the exception of those accounting by other standards. For example, stocks, assets under construction contracts, investment property and some other categories of assets of commercial firms are excluded from the scope of IAS 36 IAS 36. However, the IAS 36 standard applies to such financial assetsAs subsidiaries, associated enterprises and assets arising from joint activities.
IAS 36 IFRS - Application Features
According to the logic of IFRS, the asset depreciation indicator is the excess of its book value of theoretical reimbursement, which may be obtained for it. When the company's financial management identifies the likelihood of an asset impairment, it is required to immediately assess the asset and its recoverable cost. It is, regardless of the emergence of suspicion, at the end of each reporting period it is necessary to check the availability of signs of impairment. If the identification of processes or signs of impairment gave the result, the company should explore the reimbursable value of the asset.
Companies are recommended (regardless of the macroeconomic situation and market factors) annually assess the reimbursable value and risk of impairment of intangible assets with an indefinite service life. Such an audit can take place at any time annually, subject to passing every time at the same time. The initially recognized material asset must undergo the first audit on the risks and signs of impairment with an assessment of the recoverable value no later than the end of the first annual period.
According to IAS 36 IAS 36, the company must use all the external and internal sources available to it, which can help identify signs of impairment and evaluating the cost of reimbursement on the asset.
External sources according to IFRS 36 include:
- Indicators of reducing the cost of an asset over the period at a pace, significantly exceeding the expected, with normal use;
- Technical, market, legal and economic conditions that have or in the near future, with high probability will begin to have a negative impact on the asset;
- Increasing market interest rates, the norms of profit on investments and other financial indicators that will adversely affect the discount rate accounted for in the mathematical calculus of the asset value.
Internal data sources according to IAS 36 include:
- Changes in the company itself, which can be expressed in organizational or financial changeswho will have a negative impact on the asset;
- Physical damage, technical and moral obsolescence of the asset or a sharp change in the competitive advantages of similar assets of competitors;
- Changes in the actual use of an asset: downtime, termination of use, disposal plans and other changes in the process of useful application of an asset;
- The emergence of signs or information that indicate a serious reduction in the productivity of the asset and its economic efficiency compared with the calculated estimates;
- The presence of a gap in financial flows relative to the asset when the amount spent on the purchase and commissioning of the use, as well as the asset spent on the current operation, significantly exceeds the budget scheduled;
- The deterioration of the actual data of the financial benefits from the use of an asset in comparison with the forecast and planned values \u200b\u200bin the absence of operational opportunities to influence this situation;
- In assessing the benefits of using an asset in the forecast mode, the company identifies the likelihood of a decline cash streams, profitability, operating profit or in general - promising formation of operational losses and net retirement of funds.
This list of sources and factors is not complete. Depending on the organizational system of the company itself, its management and principles accounting Policy Any other indicators and metrics can be used that will help to identify, evaluate and take into account possible impairment of the company's asset. Impairment check, especially goodwill factors, is an individual process for each individual in question. Therefore, there is no single set of factors and processes that must be applied to all companies without exception. However, IAS 36 describes the data sources listed above as preferentially by referring to them and recommends completing its estimates with any other significant information that the company can take advantage.
Each corporate asset in its own way is sensitive to market and economic changesTherefore, it is necessary to evaluate and analyze with this assumption. Analytical work may show that the asset considered is not sensitive to the factors listed above and can only be estimated according to the individual system of indicators developed specifically for this asset. In this case, the company needs to evaluate the importance of such an assessment for its own reporting users and find a method for accounting and evaluating the impairment factors of such an asset.
The situation considered in this paragraph is to a lesser extent applies to material assets and is largely characteristic of intangible. Typically, individual metrics are required by all sorts of logistical and intellectual assets, which is in principle complicated, but cannot be excluded from the reporting of the firm on international System Financial reporting standards.
When taking into account the impairment of assets, companies are recommended to be as rational as possible and strive to the maximum balanced data composition. For example, after estimating the size of the market compensation, it becomes obvious that its amount exceeds the carrying amount of the asset. If there is an excess objectively according to market trends, the firm should not overestimate the recoverable cost without the presence of grounds for performing such actions or the presence of factors and events that clearly require this. However, if the recoverable value looks unheelectively according to the market, then the IFRS standard 36 recommends additional analytics and revision of estimates using another technique.
Also, the emergence / availability of signs of intended impairment may be a consequence of incorrect assessment. This in turn can serve as an indicator that demonstrates the need to make changes to the methods of accounting, depreciation, value estimates and other asset parameters in order to bring data to objectivity. According to IAS 36, the maximum correct set of data and the most professional approach to the assessment will ensure the accuracy and high value of such reporting.
UO According to IAS 36 IFRS, the amount is recognized as a result of a sequential process, in which at the first stage it was found that the recoverable cost is less than the balance sheet, and then the carrying price was adjusted to the value of the recoverable. This difference (adjustment) and recognizes the UO. Any impairment firm loss is recognized in profit / losses immediately, only if it is not about the asset with an overvalued value. Losses from an overvalued asset are recognized in other comprehensive income in the amount of the cost of value from the reassessment of the asset.
When the US amount becomes more than the carrying amount of the asset, the company recognizes the obligation that occurs if another standard requires, and the depreciation deductions are corrected taking into account the residual service life of the asset. When recognizing the UO Current and postponed tax obligations re-determined by evaluation tax base Based on the adjusted book value.
The IAS 36 IFRS standard provides that the assessment of some assets is difficult due to the impossibility of their separate use. An example of such assets can serve composite parts of enterprises, additional equipment in assets and other values \u200b\u200binseparable from basic business. Such assets are considered as part of the so-called units of generating cashIf there is no possibility on the individual assessment of the asset. Even if all economic benefits of a group of such assets are consumed by other generating units (for example, in the production process), such a group is still considered as a separate, generating funds unit if the company can sell its products on the open market.
Increasing the carrying amount of the asset (except goodwill), if not recognized the UND, is recognized as a revaluation. Such recovery is recognized immediately in profit and loss, and any restoration of losses on an overvalued asset is taken into account as an increase in the amount of revaluation and is recognized as part of the company's total income.
According to the requirements of IFRS 36, the Company must disclose all the necessary information regarding assets impairment in its financial statements in order to allow reporting users to make the most rational management conclusions. Such information should definitely include:
- Assets affected by impairment and reduced impairment;
- The amount of uh, recognized by the company in the period and as part of other aggregate income;
- The amount of restored UO in the period and amount of impairment on revalued assets;
- Meaningful information regarding the nature of the events and circumstances that led to the recognition / restoration of the UO;
- Descriptions of the generating units under consideration, as part of the assets;
- The disclosure of the company is welcomed additional information Regarding the assets assessment process.
Conclusions and conclusion
Accounting for losses related to the impairment of assets of the company is a complex process in financial System Management modern enterprise. The IAS 36 IAS 36 standard is an applied tool that determines the set of methods, the sequence of procedures and approaches necessary for the correct implementation of this process. Asset impairment data is certainly have great value for management links and reporting users who want to evaluate financial condition Firms and make a promising forecast of the liquidity of the enterprise for the future.
Testing on the possibility of impairment is subject to almost all assets, both negotiable and non-current . Standard IFRS 36 "Impairment of Assets" (Appendix 23 to the order of the Ministry of Finance of the Russian Federation No. 217n dated December 28, 15) identifies those of them that can be impaired and determines the procedure for accounting and disclosing data on such objects.
IFRS 36 Asset Impairment - Basic Concepts
In the context of IAS 36, the "Impairment of Assets" contains the terms used. So:
- balance value (BS) recognized the price of accounting for the minus amounts of accrued depreciation and loss due to impairment;
- fair cost (SS) the price is considered possible to obtain an object of sale or transfer of an obligation of a third party in the course of the usual transaction;
- reimborn amount (Sun) is the SS minus costs for disposal or on the value of use (the greatest indicator is taken). Sun is calculated for individual assets, or for their groups - so-called, units generating money;
- loss of impairment (UO) is called the difference between the balance sheet and the recoverable cost.
The scope of the standard applies to all types of assets, but except for the following:
- Objects regulated by treaties (IFRS 15);
- Deferred tax assets (IFRS 12);
- Assets arising from personnel calculations (IFRS 19);
- Finalstructions taken into account as fininstruments (IFRS 9);
- Immovable investment objects, whose assessment is carried out under the SS (IFRS 40);
- Biological assets arising during the course of agricultural and evaluated under the CC for a cons of sales costs (IFRS 41);
- active delayed costs and NMA arising from the Insurer's Rights (IFRS 4);
- Non-current assets (or drop-down groups) for implementation (IFRS 5).
Note! The action of IFRS 36 is relevant for subsidiaries, joint ventures and associated structures (terms are indicated in IFRS 10, 28, 11).
IAS 36 "Impairment of Asset" - an order of recognition of a loss and evaluation
Testing an asset compare the balance and recoverable cost. In accordance with paragraph 8, the depreciation of the asset occurs when the cost is exceeded by the balance sheet. The assessment must be executed as a state of completion of each reporting period (p. 9). The amount of the impairment decreases the value of the asset, or it is distributed between all assets included in the group, and the impairment loss is recognized in the account of income / loss accounts.
If any signs of impairment have been identified, the company is obliged to assess the recoverable value of the object. The open list of influencing external and internal factors is given in clause 12, this, for example:
- much greater decline in the cost of the asset for the period than expected
- unfavorable changes in market, economic, legal conditions,
- increasing interest rates of discounting, or other market rates of investment profitability,
- obsolescence, or physical damage of the object,
- internal reporting indicators indicate a decrease in the economic efficiency of the asset, etc.
The procedure for estimating the recoverable cost (pp 18-57) is described in the standard. Required rules for determining the balance and fair value. Separately, the mechanism of the annual assessment of the Armed For NMA with an indefinite period is given. useful use and the procedure for calculating the SS minus costs for the disposal of the object.
In clause 30, items are indicated in the calculation of value of use, including:
- evaluation of expected from the use of cash flow asset and possible oscillations of their sums,
- price, taking into account the risk of uncertainty inherent in this asset,
- non-liquidity and other factors.
Regulatory requirements for assessing and recognition of the amount of impairment loss are contained in P.P. 58-64. Data disclosure should be carried out by type of assets, that is, objects similar to the method and nature of operation. Impairment loss is recognized as part of profit / loss, except for the income of the asset on an overvalued value, according to other IFRS.
The organization should determine at the end of each reporting period, decreased by an impairment loss recognized in past periods. The order of restoration of this loss is defined in P.P. 109-125 standard.
In general, the task of IFRS 36 is to create a procedure for accounting for assets, in which their balance sheet cost will not exceed the recoverable amount, as well as the procedure for restoring an impairment loss and information disclosure methods.
In accordance with the International Financial Reporting Standards, the value of the asset on which it is reflected in accounting balanceshould not exceed its recoverable amount. Recall that under the recoverable amount it is understood as the largest of two quantities: fair value less expenses for the disposal or value of use.
If the balance sheet value of the asset exceeds the amount that can be obtained from the use or sale of this asset, then the asset depreciated, and the organization needs to reflect the impairment loss.
How to reflect an impairment loss, restore such a loss and disclose information about it in the financial statements, is indicated in International Standa Financial Reporting (IAS) 36 Asset Impairment.
On the territory of the Russian Federation IAS (IAS) 36, the impairment of assets was enacted by the Order of the Ministry of Finance of December 28, 2015 No. 217n.
IFRS 36 does not work with respect to reserves, assets arising from construction contracts deferred tax assets, assets arising from remuneration to employees, or assets classified as intended for sale, because Existing standards in force on assets data already contain requirements for recognizing and evaluating these assets.
Impairment testing
At the end of each reporting period, the organization should determine whether there are any signs of assets' impairment. If there is any sign, the organization must determine the reimbursive amount for an asset.
IAS 36 gives examples of some signs of impairment:
- during the period, significant changes that have adverse effects for the organization, in technical, market, economic or legal organizations, in which the Organization operates, or on the market for which the asset is intended to be occurred or will occur.
- market interest rates increased during the period, and this increase is likely to have a significant impact on the discount rate used in the calculation of the value of use, and will lead to a significant reduction in the recoverable amount of the asset;
- book value pure assets Organizations exceed its market capitalization;
- there are signs of obsolescence or physical damage asset.
Regardless of the availability of any signs of impairment, the organization is obliged to test annually on impairment:
- intangible assets with an indefinite useful life, as well as those NMAs that are not yet ready for use;
- acquired when combining businesses Goodwille.
Recognition of impairment loss and its restoration
Impairment loss is the excess of the carrying amount of the asset over its recoverable amount.
In general, an impairment loss is immediately recognized in profit or loss.
If the asset is taken into account at the revalued cost (for example, the object of fixed assets in accordance with), then the impairment loss is taken into account as a decrease in the amount of revaluation in accordance with the provisions of the relevant standard.
At the end of each reporting period, the organization should determine the presence of signs that an impairment loss recognized in previous periods With regard to an asset other than goodwill, no longer exists or decreased. If any such sign, the organization must assess the recoverable amount of the asset. And restore an impairment loss.
At the same time, the increased carrying cost of a separate asset, other than goodwill, incurred on the restoration of an impairment loss should not exceed the balance sheet value that would be determined (less depreciation deductions) if no impairment loss was recognized for this asset in previous years.
IFRS 36 examines in detail the procedure for restoring an impairment loss for a separate asset, a unit generating money and goodwill.
Information disclosure
For each type of assets, i.e., a group of assets similar in nature and method of use, the organization must disclose the following information:
- the amount of impairment losses recognized as part of profit or loss during the period, and article (articles) of the cumulative income report, which reflects these impairment losses;
- the amount of restoration of impairment losses recognized as part of profit or loss during the period, and article (articles) of the total income report, which reflects the restoration of impairment losses data;
- the amount of impairment losses on revalued assets recognized during the period in other comprehensive income;
- the amount of reduction of impairment losses on revalued assets recognized during the period as part of other aggregate income.
What other information should be disclosed in the financial statements in relation to the impairment of assets, is indicated in IFRS 36.
Assets in accordance with IFRS 36 "Impairment of Assets" are subject to inspection for impairment for each reporting date. These assets include:
investments in subsidiaries associated companies and joint ventures.
earth, buildings and structures;
cars and equipment;
investment in real estate taken into account by the method of costs;
intangible assets;
The impairment of the asset is recognized only if the balance sheet value of assets exceeds the recoverable amount (the cost that can be reimbursed during the use process or as a result of the sale of an asset). Since even in small firms, the number of assets on the balance sheet is several dozen and even hundreds, and the revaluation of each asset will require high costs. In this regard, before reassessing, it is necessary to identify signs of impairment.
Exterior signs:
significant fall market value asset;
significant changes (technology, market, economy, legislation);
interest rates or other factors affecting the discount rate used in the calculation of value from the use of the asset;
the book value of the company's net assets exceeds its market capitalization.
Internal signs:
there are evidence of obsolescence or physical confirmation of the asset;
significant changes in the process of operation of the asset;
factors indicating that current or future economic results of the use of an asset, worse than expected;
other signs of a possible reduction in the cost of the asset.
Loss of impairment is to exemplate the carrying amount of the asset over the recoverable cost. Impairment loss should be recognized as a consumption in the statement of profit and loss if the assets are estimated at the value model of DT 7420 CT 2410.
If the asset is taken into account in the revalued cost, the impairment loss should be taken into account as a decrease in the cost of revaluation.
As of every date of balance, if there are signs indicating the possible impairment of the asset, the organization should make the calculation of the recoverable amount of the asset. At the same time, regardless of the availability of signs, the organization should annually calculate the recoverable amount of an asset on intangible assets with an indefinite useful life, intangible assets, not commissioned, as well as goodwill acquired as a result of business combination.
In assessing the availability of signs indicating the possible impairment of the asset, the organization should at least consider the following signs:
external sources of information;
internal sources of information.
External sources of information include:
a significant decrease in the market value of the asset during the period, which would be expected as a result of the course or normal use;
significant changes that have negatively affecting the situation of the organization that occurred during the period or expected in the near future in the technological, market, economic or legal conditions in which the organization is working, or on the market for which the asset is intended;
significant increase in market interest rates or other market rates of profitability of investments that occurred during the period, and the likelihood of the influence of these increases on the discount rate, which is used to calculate the cost from the use of the asset and significantly reduce its recoverable amount;
the carrying amount of net assets of the reporting organization is greater than CE market capitalization.
Internal sources of information include:
availability of evidence of obsolescence or physical damage to the asset;
significant changes to the degree or method of using an asset in the present or future, adversely affecting the situation of the Organization that occurred during the time or expected in the near future. For example:
simple asset;
plans for the termination or restructuring of industrial activities;
plans for the disposal of an asset in the near future;
revision of the useful use of the asset - from unlimited for limited;
based on internal reporting, evidence that current or future results of the use of an asset are worse than was supposed;
other instructions on a possible reduction in the cost of the asset:
the funds necessary to acquire asset or its operation and maintenance significantly exceed the previously provided by the budget;
clean cash flows are significantly lower than the budget scheduled;
pure cash outflows are predicted throughout the useful use of the asset.
When evaluating these indicators, it is necessary to apply the principle of materiality. If the analysis shows that the recoverable amount of the asset is not sensitive to these indicators, then there is no need to evaluate the recoverable amount. For example, if market interest rates have increased short-term plan, but they do not significantly affect the discount rate used in the calculation of the cost of using an asset that has a long useful life; Or if they affect the discount rate, but the organization will also increase the income, and therefore, the net cash flows will remain almost unchanged.
On the other hand, the decline in the cost of assets can occur due to the revision of the useful use of the asset, changes in the depreciation method or the liquidation value of the asset. If there are such signs, then the remaining useful life, the depreciation method or the liquidation value of the asset should be revised and adjusted according to IFRS applicable to the asset, even if no impairment loss is recognized for it.
Measuring the recoverable amount. The value of reducing the cost of an asset in monetary terms is determined by comparing the reimbursable amount and book value. The latter is the initial (or overvalued) cost less accumulated depreciation. The recoverable amount of the asset is the largest of two quantities: a net selling price or value from use.
If there is no reason for the fact that the cost of using an asset exceeds its fair value minus the cost of disposal, it can be considered a recoverable amount of the asset. In most cases, this applies to assets intended for sale.
Since the cost of using an asset intended for sale mainly consists of revenue from its disposal.
In the event that the ongoing use of the asset does not provide cash receipts, mainly independent of those that arise in connection with other assets, or assets, the recoverable amount is determined for the unit generating the money to which the asset belongs, except in cases where :
net selling price asset is higher than its carrying price;
the cost of using an asset can be estimated as close to its pure selling price, and a net selling price can be determined.
Net selling price. The optimal value of the net selling price is the price indicated on the fulfillment of the contract for the sale of an asset between well-aware, who wanted to make such a deal by the parties. The price specified in the contract must be adjusted to the amount of expenses directly related to the disposal of the asset. These may be the costs of legal services for the design of the transaction, fees, taxes, the costs of dismantling the asset and other direct additional costs for the pre-sales training of the asset.
In the absence of compulsory sales contract, but the presence of an active market, which trade in this asset is conducted, should be used by the market price minus the planned costs directly related to the disposal of the asset. The corresponding market price is usually the current demand price. If there are no values \u200b\u200bof the current price price as a basis for calculating the market price, the price of the most recent operation can be used, provided that in the period between the date of that operation and the date of the calculation of the net selling price did not occur in economic conditions.
In the absence of a net sales price or an active market for an asset, the Organization establishes an assessment of an asset based on the best available information. You can use information about the results of the latest operations with similar assets within the same industry. At the same time, it is necessary to take into account the wornity of the asset, the conditions of operation, if these are industrial machines and equipment are their production capacity and other production characteristics and to adjust the cost of similar assets to the effect of identified differences. You can learn such information from statistical directories.
Cost from the use of the asset.The assessment of the cost of using the asset is the calculation of the present value, which reflects the expected discounted value of future cash flows.
The calculation of the cost of using an asset suggests the following steps:
calculation of future incoming and outgoing cash flows arising in connection with the continuing use of the asset and its final disposal;
apply the appropriate discount rate to these future cash flows.
Assessment of future cash flows. When measuring the value of the value from the use of an asset, the estimate of future cash flows should be based on:
best estimated guidance economic conditionswhich will exist during the remaining useful use of the asset. More important should be attached to external evidence;
the most recent financial budgets / plans that should cover the period of the maximum duration of five years, except when a longer period can be justified;
extrapolation (if the useful life of an asset for more than five years) is a stable or downward growth rate for subsequent years, except in cases where an increase in growth rates can be justified. This growth rate should not exceed the long-term growth rate of products, industries, countries or countries in which the organization is working, or in relation to the market, which uses an asset, if only a higher pace cannot be justified. If it is appropriate, the growth rate can be equal to zero or have a negative value. It is impossible to predict the infinite growth of income, even if the five-year forecast shows their steady growth. Since the larger the asset is used, the more he loses in its value and the less brings economic benefits. In order to determine the cost of using cash flow forecasts, funds should be based on the best estimates of the management, but not at an optimistic look at the future. In order for predictions to be more reliable, more important should be given information obtained from external sources. If the asset is used after the expiration of useful use, this fact says that the useful use of the asset is incorrectly determined.
Future cash flows should be calculated based on its current state and should not include calculated future cash flows that are expected from:
future restructuring, to which the organization has not yet proceeded (as soon as the organization proceeds to restructuring, it must take into account its impact on future cash flows);
future capital expenditures that will improve or improve asset, increasing its initially estimated standard efficiency.
Restructuring is a program that is planned and controlled by the manual and which significantly changes either the sphere of the organization's activities, or a way of doing business.
Recognition and measurement of impairment loss. The impairment loss is the excess of the book value of the asset over the recoverable amount of the asset. For all assets, this position is equally, however, the loss is a bit different depending on the type of asset and the approaches applied.
Impairment loss should be immediately recognized as a consumption in the statement of profit and loss, except in cases where the asset is taken into account in the revalued value produced according to another IFRS (for example, in accordance with the procedure for accounting on the revalued value provided for by IAS (IAS) 16 " Property, machinery and equipment »). Impairment loss for an overvalued asset should be taken into account as a reduction in the cost of recovery in accordance with IFRS 16.
