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| Subject: point for Exposure Draft ED 99 "Impairment of Assets". | |
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Author: International Account Standard IAS 36 "Impairment of Assets" |
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Date Posted: 20:25:52 01/07/03 Tue http://www.aasb.com.au/public_docs/project_summaries/Impairment_project_summary.pdf Project Summary Last Updated: 5 December 2002 Page 1 of 4 Impairment of Assets Last Updated: 5 December 2002 The staff of the AASB have prepared this summary for information purposes only. The Board decisions described are tentative and do not change current accounting pronouncements. Official positions of the AASB are determined only after extensive due process and deliberations. While this summary is updated regularly, it does not provide a comprehensive review or statement of events, and should not be treated as such. Project description and current status The project on impairment of assets was borne out of a review of the recoverable amount test that began in mid-1994. It is intended to replace the recoverable amount test for non-current assets in Australian Accounting Standard AAS 10 and Accounting Standard AASB 1010 "Recoverable Amount of Non-Current Assets", and the requirements for a "recoverable amount tests" specified in AASB 1011/ AAS 13 "Accounting for Research and Development Costs", AASB 1012 "Foreign Currency Translation", AASB 1013/ AAS 18 "Accounting for Goodwill", AASB 1016/ AAS 14 "Accounting for Investments in Associates", and AASB 1036/ AAS 34 "Borrowing Costs". International Accounting Standard IAS 36 "Impairment of Assets" was used as the starting point for Exposure Draft ED 99 "Impairment of Assets". Some of ED 99 proposals differed from the requirements of IAS 36, one such crucial difference being the proposed measurement method. ED 99 was published for comment in December 1999, with comments to be received by 30 June 2000. At the August 2001 meeting, the Board reviewed the proposals of ED 99 and decided that the recoverable amount test proposed, rather than being based on fair value, should mirror that of IAS 36. Consequently, the Board decided that the project would need to be re-exposed, and directed staff to prepare a new exposure draft employing the principles of IAS 36. At the February 2002 meeting, the Board approved for public comment ED 104 "Impairment of Assets" based on the principles of IAS 36. ED 99 was withdrawn. At the August 2002 meeting the Board considered its convergence policy in light of the recent announcement of the FRC that entities subject to the Corporations Act 2001 should be required to comply with IASB standards for periods beginning on or after 1 January 2005. At that meeting the Board made a number of policy decisions, one decision being that except for Standards peculiar to the not-for-profit or public sectors or that are purely of a domestic nature, IASB Standards should be used as the "foundation" Standards to which it would add material detailing the scope and applicability of the standard in the Australian environment and any other statements dealing with local requirements. Additions, where necessary, should be made to broaden the content to cover the not-for-profit sector and domestic regulatory or other issues. In November 2002 the Board gave effect to that August 2002 policy decision by approving for public comment ED 109 "Request for Comment on: IASB ED 3 "Business Combinations"; IASB ED of Proposed Amendments to IAS 36 "Impairment of Assets" and IAS 38 "Intangible Assets"; and AASB added material". ED 104 was withdrawn. Project Summary: Impairment of Assets Last Last Updated: 26 March 2002 Page 2 of 4 Board decisions to date The Board last considered this project as part of its out of session consideration of ED 109 "Request for Comment on: IASB ED 3 "Business Combinations"; IASB ED of Proposed Amendments to IAS 36 "Impairment of Assets" and IAS 38 "Intangible Assets"; and AASB added material" during November 2002. Out of session considerations November 2002 The Board agreed out of session to issue ED 109 "Request for Comment on: IASB ED 3 "Business Combinations"; IASB ED of Proposed Amendments to IAS 36 "Impairment of Assets" and IAS 38 "Intangible Assets"; and AASB added material" to the public for comment to the Board by 10 March 2002. ED 109 contains the IASB material together with additional AASB material, for example, material that addresses specific issues affecting notfor- profit entities such as the measurement of impairment of assets that are not primarily dependent on net cash flows. ED 104 "Impairment of Assets" has now been withdrawn. 27-28 February 2002 The Board agreed to issue ED 104 "Impairment of Assets" to the public for comment by 30 June 2002. ED 104 proposes that an entity must determine an asset’s recoverable amount if there is an indication at reporting date that the asset may be impaired. An asset’s recoverable amount is the higher of the asset’s net selling price and its value in use. If the asset’s carrying amount is greater than its recoverable amount, ED 104 proposes that the entity recognise as an expense the amount by which the carrying exceeds the recoverable amount. ED 104 also outlines the requirements for reversing any impairment loss. The proposals in ED 104 relating to the determination of discount rates, the impairment testing of goodwill and the disclosure requirements may be subject to change once the IASB completes its project on business combinations. The Board intends to issue a revised AASB 1010 (based on the requirements of ED 104) at the same time as an Accounting Standard on business combinations. The two Accounting Standards will share the same operative date, which has not yet been determined. ED 99 "Impairment of Assets" has now been withdrawn. 14 November 2001 The Board reviewed the draft exposure draft prepared by staff in accordance with decisions from the August 2001 Board meeting. The Board directed staff to make various drafting changes to the draft exposure draft and table it at the next Board meeting for approval to release to the public. 2-3 August 2001 The Board reviewed the proposals of ED 99 "Impairment of Assets", examining in particular the proposal to define recoverable amount on the basis of fair value. The Board agreed to follow the higher of net selling price or value in use definition of recoverable amount as espoused by IAS 36 "Impairment of Assets". Staff were directed to prepare a new exposure draft based on the proposals of IAS 36. Project Summary: Impairment of Assets Last Last Updated: 26 March 2002 Page 3 of 4 8-9 December 1999 The Board agreed to issue ED 99 "Impairment of Assets". ED 99 proposes that an asset’s recoverable amount need only be measured where there is an indication that the asset’s carrying amount may exceed its recoverable amount. "Recoverable amount" is defined as the maximum amount an entity would rationally be prepared to pay for an asset, measured as the asset’s fair value where it is held for continuing use and fair value less costs of disposal where it is held for disposal. ED 99 also proposes: • to require an impairment loss recognised in a previous reporting period for an asset other than goodwill to be reversed when the asset’s recoverable amount rises above its carrying amount (but only to the extent that it does not increase the asset’s carrying amount above the carrying amount that would have been determined for the asset had no impairment loss been recognised in a previous reporting period); • to prohibit reversals of impairment losses in relation to goodwill. The comment period for ED 99 will close on 30 June 2000. 9-10 November 1999 The Board decided to reverse its previous decision and exclude financial assets from the scope of the ED. The Board also agreed to include in the scope of the ED assets arising in respect of construction contracts and, for the extractive industries, costs carried forward arising from development related to an area of interest. 12-13 October 1999 The Board agreed to include financial assets other than those arising from transactions designated as hedges of specific commitments (such as hedge discounts and foreign exchange losses carried forward as assets) in the scope of the ED. 1-2 September 1999 The Board considered a draft Exposure Draft "Impairment of Assets" and agreed that financial instruments should be included in the scope of the Exposure Draft. The Board also agreed to include a "Basis for Conclusions" as part of the Exposure Draft and will consider a draft "Basis for Conclusions" at its October meeting. 28-29 July 1999 The Board considered a staff issues paper and a draft Exposure Draft "Impairment of Assets" and agreed that the recoverable amount of an asset held for continuing use is its fair value, whilst the recoverable amount of assets held for disposal is fair value less costs of disposal. The Board also agreed that reversals of impairment losses for goodwill should be prohibited and impairment losses for assets other than goodwill should be reversed whenever the recoverable amount of an asset rises above its written-down carrying amount. The Board further agreed that the increased carrying amount of an asset due to a reversal of an impairment loss must not exceed the carrying amount that would have been determined for the asset had no impairment loss been recognised in previous reporting periods. [Decisions on the impairment project made prior to the earliest date reported here may be made available on the AASB web site in the future] Project Summary: Impairment of Assets Documents issued ED 109 "Request for Comment on: IASB ED 3 "Business Combinations"; IASB ED of Proposed Amendments to IAS 36 "Impairment of Assets" and IAS 38 "Intangible Assets"; and AASB added material" (December 2002) ED 104 "Impairment of Assets" (March 2002) ED 99 "Impairment of Assets" (December 1999) AAS 10 "Recoverable Amount of Non-Current Assets" (December 1999) AASB 1010 "Recoverable Amount of Non-Current Assets" (December 1999) AAS 13 "Accounting for Research and Development Costs" (March 1983) AASB 1011 "Accounting for Research and Development Costs" (May 1987) AAS 20 "Foreign Currency Translation" (December 1987) AASB 1012 "Foreign Currency Translation" (November 2000) AAS 18 "Accounting for Goodwill" (June 1996) AASB 1013 "Accounting for Goodwill" (June 1996) AAS 14 "Accounting for Investments in Associates" (May 1997) AASB 1016 "Accounting for Investments in Associates" (August 1998) AAS 34 "Borrowing Costs" (December 1997) AASB 1036 "Borrowing Costs" (December 1997) Project Staff Mark Shying Project Manager E-mail: mshying@aasb.com.au Phone: +61 3 9617 7619 Stephen Powell Graduate Intern E-mail: spowell@aasb.com.au Phone: +61 3 9617 7632 [ Next Thread | Previous Thread | Next Message | Previous Message ] |