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When an impairment loss recognised in a prior period for a CGU is REVERSED:
AReversal applies uniformly to all assets including goodwill
BGoodwill impairment is reversed first
CReversals only apply to indefinite-life intangibles
DONLY non-goodwill assets' impairments may be reversed (goodwill impairment can NEVER be reversed); the reversal is allocated pro rata to non-goodwill assets, subject to the cap that the new CA does not exceed the lower of (i) the recoverable amount and (ii) the CA that would have existed had no impairment been recognised
Answer & Solution
Correct answer: D. ONLY non-goodwill assets' impairments may be reversed (goodwill impairment can NEVER be reversed); the reversal is allocated pro rata to non-goodwill assets, subject to the cap that the new CA does not exceed the lower of (i) the recoverable amount and (ii) the CA that would have existed had no impairment been recognised
Ind AS 36 paragraphs 122-125: GOODWILL IMPAIRMENT IS NEVER REVERSED. Reversal for other assets is allocated pro rata, capped at the lower of (a) recoverable amount, and (b) the depreciated CA the asset would have had absent impairment — preventing artificial 'gains' from reversal.
Related questions
Identify the statement about CGU disclosure under Ind AS 36 that is INCORRECT.When an impairment loss is allocated within a CGU, the order of allocation under Ind AS 36Multiple CGUs share the SAME key assumption (e.g. growth in a common end market) and the AAn entity's CGU recoverable amount is based on VIU. The discount rate disclosure required An entity uses a SENSITIVITY disclosure when a reasonably possible change in a key assumptWhen projecting cash flows beyond the period covered by management's most recent budgets/fWhen an entity discloses a CGU to which significant goodwill is allocated and recoverable An entity tests goodwill annually. The most recent detailed RA calculation for a CGU excee