FRS 136: Impairment of Assets

Introduction

The main objective of this standard is to ensure that the values of assets disclosed in the balance sheet, referred to, as the carrying amounts are not stated higher than their recoverable amounts. Assets can be recovered either through sale (net selling price) or through use (value-in-use). If the recoverable amount is lower than the carrying amount, then the asset value is deemed to be overstated in the balance sheet, and will have to be adjusted for an impairment loss.

In general, the standard requires that an entity test for impairment when there is an indication that an asset might be impaired (with the exception of goodwill and intangible assets with indefinite useful lives).

Impairment tests and the calculations involved are inherently subjective and judgmental in nature. As a result, this area is very onerous, complicated and difficult to understand and apply. In addition, the standard has been revised recently to take into consideration new developments in the accounting treatment of goodwill and intangible assets with indefinite useful lives.

Objectives and course contents of seminar

Explains the following areas:

a. When to carry out impairment tests. Note that it is not a requirement that    possible impairment be calculated for all assets. The standard prescribes    the existence of conditions (referred to as indicators) that might be    suggestive of a higher risk of impairment that must be evaluated.

b. How to calculate and compare the relevant figures. Key computations are to    determine the following:
 - carrying amount
 - net selling price
 - value-in-use : - projected future cash flows and discount factor 

c. Identifying cash-generating units (CGUs)
d. Accounting for the impairment losses of assets carried at:
 - cost
 - valuation

e. Conditions determining the possibility of reversal of impairment losses
f. Impairment of goodwill and intangible assets with indefinite useful lives
g. Disclosure requirements, including new disclosures for business acquisitions

Target Audience : All
CPD Code : 081016KL1

Speaker’s Profile

Ms Lim Geok Heng

Ms Lim is a Fellow member of the Association of Chartered Certified Accountants (FCCA, UK) and a Chartered Accountant of the Malaysian Institute of Accountants [CA(M)]. She is also a Certified Professional Trainer (CPT) of the International Professional Managers Association [IPMA,UK].

She has over 20 years experience in areas comprising auditing, financial accounting, treasury functions, education and corporate training. Her most recent past appointments include the positions of Technical and Training Director of a medium-sized international accounting firm, Training Manager of Ernst & Young, Lecturer in Sunway-University College and Senior Lecturer in Tunku Abdul Rahman College.

Currently, Ms Lim is a freelance technical and training consultant with her own training business, EVO Training and Consulting. She speaks on MASB Reporting Standards (FRS and PERS), and accounting and audit issues regularly and extensively throughout Malaysia for professional accounting bodies such as MIA, ACCA, MAICSA, CIMA, MICPA and CPA Australia. In addition, she also conducts in-house technical training on accounting issues for commercial and listed companies, and private training institutions in Malaysia, Singapore and Thailand.

Ms Lim is engaged on a regular basis by medium-sized accounting firms to provide technical and training services for their professional audit staff as well as their business clients. Ms Lim is also the current (and 2006) Chairman of the ACCA-FRS (Financial Reporting Standards) Committee. In addition to the above, she is also a Panel Member of the annual NACRA (National Annual Corporate Report Award) adjudication.