Powtoon-Impairment of Assets...

By athirahmohamad11 | Updated: March 25, 2025, 8:12 a.m.

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MEASUREMENT OF IMPAIRMENT
Test for impairment:
Carrying Amount   vs   Recoverable Amount 
CA : Cost - Accumulated Depreciation
RA : VIU vs FV-CTS
(whichever is higher)

There is impairment loss when CA > RA
Value in Use
- estimate of future cash flow expected to derive from asset
-price for bearing uncertainty inherent in asset
-market participants reflect in pricing future cash flow
- time value of money
- possible variations expected in amount or timing of future cash flow
Example:
Inara Sdn Bhd aquired equipment for RM3 million on 
1 Jan 2008. On 1 Jan 2013, there were indications that 
the equipment may be impaired. The carrying amount of 
the equipment is RM 1.5 million.The value in use was 
calculated to be RM 1 million and the fair value less cost 
as at the date was RM 1.3 million.

Test for impairment : CA vs RA
CA : RM 1.5 million
RA : VIU vs FV-CTS (WIH)
VIU : RM 1 million
FV-CTS : RM 1.3 million
So, RA = RM 1.3 million

RA : VIU vs FV-CTS (WIH)
VIU : RM 1 million
FV-CTS : RM 1.3 million
So, RA = RM 1.3 million

Example:
Inara Sdn Bhd aquired equipment for RM3 million on 
1 Jan 2008. On 1 Jan 2013, there were indications that 
the equipment may be impaired. The carrying amount of 
the equipment is RM 1.5 million.The value in use was 
calculated to be RM 1 million and the fair value less cost 
as at the date was RM 1.3 million.

Test for impairment : CA vs RA
CA : RM 1.5 million
RA : VIU vs FV-CTS (WIH)
VIU : RM 1 million
FV-CTS : RM 1.3 million
So, RA = RM 1.3 million

CA > RA, so there is impairment loss of RM 0.2 million

Powtoon-Impairment of Assets...

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