IAS 36 and the Framework for the preperation and presentation of financial statements

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1. IAS 36 is the International Accounting Standards (IAS) that deals with the impairment of assets. This standard was first implanted on the 1st July 1998 and it was revised on the 31st of March 2004 and was effective on the 1st of April 2005 (homepage)1.


The carrying amount can be defined as the amount at which an asset is recognized in the balance sheet less accumulated depreciation and accumulated impairment losses. The recovery amount can be defined as the higher of an asset's fair value less costs to sell (usually called net sales) and its value in use (homepage)2. The International Accounting Standards Board has prescribed the identification and conditions for assets to be impaired. Every reporting date at the end of an accounting period every organisation applying the rules of the IFRS should test if any asset is impaired. If any such asset shows that it is impaired then the organisation shall estimate the recovery amount of such asset. Other conditions attach to this test includes the test of for an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test may be performed at any time during an annual period, provided it is performed at the same time every year. Different intangible assets may be tested for impairment at different times. ...
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