c.) Evidence of impairment. Reversal of impairment is a situation where a company can declare an asset to be valuable where it has previously been declared a liability. Inventories –reversal of impairment •At each reporting date: •Reversal required when: •Reversal limited to amount of original impairment •Credit is gain in profit or loss In general, asset impairment indicates that an asset costs more to a business than it is worth. Therefore, the full reversal of the impairment loss is recognised. IAS 36 Example of the reversal of impairment. 6) as no assets were previously revalued in this example. Schedule 4. 21(a)). However, to the extent that an impairment loss on the same revalued asset was previously recognised in profit or loss, a reversal of that impairment loss is also recognised in profit or loss. Impact of expected credit losses on interest calculation ... is recognised as a reversal of impairment loss. Required Calculate the reversal of the impairment loss. IAS 36 Example of the reversal of impairment. What is an Impairment Loss? This impairment loss shall reduce the carrying amount of any goodwill allocated to the CGU, first (para. An impairment loss is a recognized reduction in the carrying amount of an asset that is triggered by a decline in its fair value.When the fair value of an asset declines below its carrying amount, the difference is written off.Carrying amount is the acquisition cost of an asset, less any subsequent depreciation and impairment charges. MikeLittle. The impairment loss on individual asset will be reversed but up to a limit i.e. At the End of 20X3 C154 There is a cash outflow of Rp100 when the restructuring costs are paid. Challenges of applying the impairment approach Testing the net investment in an equity-method investee for impairment in accordance with the requirements of IAS 28, IAS 36 and IFRS 9 requires discipline and judgment. Reversal of impairment loss is recognized in the P&L unless it relates to a revalued asset. the carrying value of the asset should not go beyond the amount that would have been if impairment loss has never been charged, after the reversal of impairment loss. 120A reversal of an impairment loss on a revalued asset is recognised in other comprehensive income and increases the revaluation surplus for that asset. The impairment loss shall be recognised immediately in profit or loss (para. An impairment loss should be regarded as incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after initial recognition (a ‘loss event’). Answer. Calculation of the reversal of the impairment loss at the end of 20X2 * The reversal does not result in the carrying amount of the plant exceeding what its carrying amount would have been at depreciated historical cost. 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