Page 10 - 29. COMPILER QB - IND AS 10

Impairment loss A/c (W.N.2) Dr. 2,47,059
To Warehouse or Accumulated depreciation A/c 2,47,059
(Being impairment loss recognised due to discovery of
structural fault in the construction of warehouse at 31st
December 2019)
ii)
a) The damage to the warehouse is an adjusting event (occurred after the end of the year 2019) for the

reporting period 2019, since it provides evidence that the structural fault existed at the end of the
reporting period. It is an adjusting event, in spite of the fact that fault has been discovered after the
reporting date.
The effects of the damage to the warehouse are recognised in the year 2019 reporting period. Prior periods
will not be adjusted because those financial statements were prepared in good faith (eg. regarding
estimate of useful life, assessment of impairment indicators etc) and had not affected the financials of

prior years.
b) Damage of inventory due to seepage of rainwater Rs. 1,00,000 occurred during the year 2020. It is a
non-adjusting event after the end of the 2019 reporting period since the inventory was in good
condition at 31st December 2019. Hence, no accounting has been done for it in the year 2019.
H Ltd. must disclose the nature of the event (i.e. rain-damage to inventories) and an estimate of the

financial effect (i.e. Rs. 1,00,000 loss) in the notes to its 31st December 2019 annual financial
statements.
iii) If the damage to the warehouse had been caused by an event that occurred after 31st December 2019 and
was not due to structural fault, then it would be considered as a non-adjusting event after the end of the
reporting period 2019 as the warehouse would have been in a good condition at 31st December 2019.

Working Notes:
1. Calculation of additional depreciation to be charged in the year 2019
Original depreciation as per SLM already charged during the year 2019
= ₹ 10,00,000/ 30 years = ₹ 33,333.

Carrying value at the end of 2018 = 10,00,000 – (₹ 33,333 x 3 years)
= ₹ 9,00,000 Revised depreciation = 9,00,000 / 17 years = ₹ 52,941
Additional depreciation to be recognised in the books in the year 2019
= ₹ 52,941 – ₹ 33,333 = ₹ 19,608
2. Calculation of impairment loss in the year 2019
Carrying value after charging depreciation for the year 2019

= ₹ 9,00,000 – ₹ 52,941 = ₹ 8,47,059
Recoverable value of the warehouse = ₹ 6,00,000
Impairment loss = Carrying value - Recoverable value = ₹ 8,47,059 - ₹ 6,00,000 = ₹
2,47,059

29. 9