Page 19 - 10. COMPILER QB - INDAS 36

Entire book value of plant will be written off and charged to profit and loss account.

* Carrying amount before impairment on 31/03/2019 = 2.4Cr

Alternate Answer
Note: Since question requires computation of Impairment Loss on 31.3.2019, hence impairment probability on
31.3.2018 has been ignored. However, since there is an impairment probability at the beginning of the year as
well, one may calculate the carrying amount at the beginning of the year after impairment and then calculate
the impairment possibilities at the end of the year.

Accordingly, the solution will be as follows:
Rs. in crore
Carrying amount before impairment on 1.4.2018 (20 - 16.60) 3.40
Recoverable amount i.e. higher of NSP (1.20 cr) and Value in use (1.40 cr) 1.40
Impairment loss 2.00
Revised carrying amount after impairment as on 1.4.2018 1.40
Less: Depreciation for 2018-2019 (as given in the question) (1.00)
Carrying amount as on 31.3.2019 0.40
Recoverable amount as on 31.3.2019 (Refer W.N. 2, 3 and 4 above) 0.98
Impairment Loss as on 31.3.2019 (since carrying amount is less than recoverable
amount) NIL

Q12 (May 19 – 4 Marks) - Similar to Q.8

st
KAPC Ltd. acquired a machine on 1 April, 2010 for 10 crore that had an estimated useful life of 8 years. The
st
machine is depreciated on a straight line basis and does not carry any residual value. On 1 April, 2014, the

carrying value of the machine was reassessed at Rs. 7.10 crore and surplus arising out of the revaluation being
credited to revaluation reserve.
For the year ended March, 2016 conditions indicating an impairment of the machine existed and the amount
recoverable ascertained to be only Rs. 1.09 crore. You are required to calculate the loss on impairment of the
machine and show how this loss is to be treated in the books of KAPC Ltd.

KAPC Ltd, had followed the policy of writing down the revaluation surplus by the increased charge of
depreciation resulting from revaluation as per INDAS 36.
SOLUTION

STATEMENT SHOWING IMPAIRMENT LOSS
(in crore)
st 10.00
Carrying amount of the machine as on 1 April, 2010

Depreciation for 4 years i.e. 2010-2011 to 2013-2014 (5.00)
Carrying amount as on 31.03.2014 5.00
Add: Upward Revaluation (credited to Revaluation Reserve account) 2.10

st 7.10
Carrying amount of the machine as on 1 April, 2014 (revalued)
Less: Depreciation for 2 years i.e. 2014-2015 and 2015-2016 (3.55)
Carrying amount as on 31.03.2016 3.55
10. 18