This article, Scope and structure of MFRS 136, looks at the scope of the impairment review (i.e. the types of assets that are included) and how it is structured (i.e. the level at which assets are reviewed).
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Usually non-current assets are measured in the financial statements at either cost or revalued amount. However, MFRS 136 ‘Impairment of Assets’ requires assets to be carried at no more then their revalued amount and any difference to be recorded as an impairment. However, its requirements of when and if to undertake an impairment review are sometimes challenging to apply in practice.
The articles in our ‘Insights into MFRS 136’ series have been written to assist preparers of financial statements and those charged with the governance of reporting entities understand the requirements set out in MFRS 136, and revisit some areas where confusion has been seen in practice.
This article explains if and when a detailed impairment test as set out in MFRS 136 is required. The guidance prescribes different requirements for goodwill and indefinite life intangible assets (including those not ready for use) when compared to all other assets.
As such, this article will cover Step 3 in the impairment review which is to determine if and when to test for impairment is needed.
How we can help
We hope you find the information in this article helpful in giving you some insight into MFRS 136. If you would like to discuss any of the points raised, please do not hesitate to contact us.
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Insights into MFRS 136
Scope and structure of MFRS 136
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MFRS 136 - Overview of the Standard
This article provides an ‘at a glance’ overview of MFRS 136’s main requirements and outlines the major steps in applying those requirements.