Page 15 - 10. COMPILER QB - INDAS 36

SOLUTION

Treatment of Impairment Loss
1. As per IND AS 36 “Impairment of assets”, if the recoverable amount (higher of fair value, less cost to
dispose and its value in use) of an asset is less than its carrying amount, the carrying amount of the
asset should be reduced to its recoverable amount.

2. In the given case, net selling price is Rs. 64.50 lakhs (Rs. 67.50 lakhs – Rs. 3 lakhs) and value in use is
Rs. 60 lakhs. Therefore, the recoverable amount will be Rs. 64.50 lakhs. Impairment loss will be calculated
as Rs. 10.50 lakhs [Rs. 75 lakhs (Carrying Amount after revaluation - Refer Working Note) less Rs. 64.50
lakhs (Recoverable Amount)].
3. Thus, impairment loss of Rs.10.50 lakhs should be recognised as an expense in the Statement of Profit and

Loss immediately since there was downward revaluation of asset which was already charged to Statement
of Profit and Loss.

Working Note:
Calculation of carrying amount of the Property, Plant & Equipment at the end of the fourth year on
revaluation

(Rs. in lakhs)
Purchase price of a Property, Plant and Equipment 150.00
Less: Depreciation for four years [(150 lakhs / 10 years) x 4 years] (60.00)
Carrying value at the end of fourth year 90.00
Less: Downward revaluation charged to profit and loss account (15.00)
Revalued carrying amount 75.00
Recoverable amount = 64.50 lakhs
Impairment loss = 10.50 lakhs

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