Summary 
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Compared to IFRS 
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AASB website 

• inventories (AASB 102)
 

• assets arising from construction contracts (AASB 111)
 

• deferred tax assets (AASB 112)
 

• assets arising from employee benefits (AASB 119)
 

• financial assets (AASB 139)
 

• investment property measured at fair value (AASB 140)
 

• biological assets related to agricultural activity measured at fair value (AASB 141)
 

• insurance contract assets (AASBs 4, 1023, 1038)
 

• non-current assets held for sale (AASB 5).

• External sources of information include:
• Market value of the asset has declined significantly
 

• Negative change in technology, markets, economic conditions, or laws
 

• Interest rates or rates of return have increased.
 

• Internal sources of information include:
  • Obsolescence or physical damage to the asset
   
  
  • Asset idleness, discontinued or restructured operations
   
  
  • Economic performance of the asset is worse than expected.

Fair value less costs to sell (paragraphs 25-29)
• Best evidence is a price in a binding sale agreement in arms length transaction adjusted for incremental disposal costs.
 

• If no binding sale agreement but an active market, then market price less costs of disposal.
 

• If no binding sale agreement or active market, then consider outcome of recent transactions for similar assets within the same industry.
 
Value in use (paragraphs 30-57) 
Calculation of value in use must include the following elements:
• Estimated future cash flows the entity expects to derive from the asset
 

• Expectations about possible variations in the amount and timing of these future cash flows
 

• Time value of money represented by market risk-free-rate
 

• Inherent risk in the asset
 

• Other factors that would affect the price that market participants would place on the future cash flows from the asset – eg. liquidity.
 
Cash flow projections must be determined as follows:
• Based on reasonable and supportable assumptions that represent management’s best estimate
 

• Based on most recent budgets/forecasts that cover a maximum period of five years unless a longer period can be justified
 

• Beyond five years use steady or declining growth rate unless an increasing rate can be justified
 

• Based on continuing use of the asset
 

• Include cash outflows that are necessarily incurred from continuing use
 

• Include net cash flows that relate to disposal at the end of useful life in arms l length transaction
 

• Based on asset in its current condition.
 
The discount rate used in the value in use calculation must be a pre-tax rate that reflects current market assessments of:
• The time value of money
 

• Risks specific to the asset for which future cash flow estimates have not been adjusted.
 
Value in use for not-for-profit entities – use depreciated replacement cost if the future economic benefits of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and the entity would replace the asset if deprived of it.

• Recognise only if the carrying amount of the asset exceeds its recoverable amount
 

• Recognise an impairment loss immediately in the profit or loss unless the asset is carried at a revalued amount
 

• Recognise an impairment loss on revalued assets consistently with revaluation requirements for the asset that apply in another Standard
 

• After recognising an impairment loss, the depreciation/amortisation charge for the asset must be adjusted so that the remaining carrying amount (less its residual amount, if any) is allocated systematically over the remaining useful life.

CGUs (paragraphs 66-79): 

• The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash flows of other assets or groups of assets.
 

• If active market exists for the output produced by an asset or a group of assets (even if some or all of the output is used internally), this asset or group of assets should be identified as a cash-generating unit.
 

• CGU’s must be identified consistently from period-to-period for the same asset or types of assets unless a change is justified.
 

• Carrying amount of a CGU must be determined on a consistent basis to the way recoverable amount of the CGU is determined.
 
Goodwill and CGUs (paragraphs 80-90): 

• Goodwill acquired in a business combination must be allocated to CGUs or groups of CGUs based on the expected benefits from the synergies of the combination
 

• Each CGU or group of units to which goodwill is allocated must be lowest level within the entity at goodwill is monitored for internal management purposes and not be larger than a segment identified in accordance with AASB 8 Operating Segments (applicable from 1 January 2009, with early adoption permitted) or AASB 114 Segment Reporting.
 
Impairment loss for a CGU (paragraphs 104-108): 

• Impairment loss equals the excess of the carrying amount of the CGU over its recoverable amount
 

• The impairment loss is allocated to the CGU as follows:
  1. Reduce the carrying amount of any goodwill allocated to the CGU
   
  
  2. Reduce the carrying amounts of the other assets in CGU on a pro-rata basis (treated as impairment losses on individual assets)
   
  
  3. When applying these rules:
  • An entity must not reduce an asset in the CGU below the higher of its recoverable amount or zero
   
  
  • An impairment loss that cannot be allocated to an asset in the CGU because it would result in the carrying amount of that asset being less than its recoverable amount or zero must be re-allocated to the other assets in the CGU.

• Assess at each reporting date whether there is an indication that a previously recognised impairment loss for an asset other than goodwill may no longer exist or have decreased. If an indication exists, estimate the recoverable amount.
 

• A reversal of an impairment loss is only permitted if one of the estimates used to determine the recoverable amount has changed.
 

• For an individual asset:
• The increased carrying amount due to the reversal cannot be greater than the carrying amount had no impairment loss been recognised.
 

• Recognise the reversal immediately in the profit or loss unless the asset is carried at a revalued amount.
 

• Recognise reversal on revalued assets consistently with revaluation requirements for the asset that apply in another Standard.
 

• After the reversal, the depreciation/amortisation charge for the asset must be adjusted so that the remaining carrying amount (less its residual amount, if any) is allocated systematically over the remaining useful life.
• For a CGU:
• A reversal must be allocated pro rata to the assets of the CGU, except goodwill, and be treated as reversals for individual assets, as described above.
 

• In allocating the reversal, the carrying amount of an asset shall not be increased above the lower of its recoverable amount and the carrying amount had no impairment loss been recognised.
• Reversal of an impairment loss for goodwill is not permitted.

• For each class of assets, impairment losses and reversals.
 

• For each reportable segment (per either AASB 8 or AASB 114 as applicable), impairment losses and reversals.
 

• For each material impairment loss or reversal:
• the events and circumstances that led to the recognition or reversal
 

• the nature of an individual asset and its reportable segment
 

• a description of the CGU, whether value in use or fair value less costs to sell was used as the recoverable amount, and basis for determination.
 

• Various disclosures regarding estimates used to measure recoverable amount of CGUs with goodwill or indefinite lived intangible assets.

• Determining CGUs
 

• Calculating value in use and impairment loss
 

• Deferred tax effects of impairment losses
 

• Reversal of impairment loss
 

• Treatment of future restructuring
 

• Treatment of future costs
 

• Impairment testing of CGUs with goodwill and minority interests
 

• Allocation of corporate assets
 

• Disclosures