Patent acquired for 153000 having useful life of 10 years At the end of 5th year a health hazard was identified and its fair value was determined at 62370 with future cash flows equal to 72000. Due to which it was impaired by 14130 i.e 76500-62370
At end of 6th year hazard was solved and fair value was determined at 48600 with furure cash flows of 58500. Is there any impairment loss/(recovery) to be recorded at end of 6th year and what is adjusted carrying value of asset at the end of 6th year
I’ll take into view that the patents acquired as purchased and not from business combinations.
Impairment loss is recognised in the same year when it occurs.
In the next year, if there is a recovery of carrying amount of the asset, you can reverse impairment charges.
Here you gave recoverable amounts of FVLCD & VIU, but not the carrying amounts.
The reversal is recognised in P&L unless Asset is using revaluation model instead of cost model.
Finally, establish there is no impairment in the sixth year, calculate NBV after adjusting for amortisation, when there is no indication of impairment this year ie., carrying value is lower than its recoverable amount, reverse previous impairment charges.
IAS 36 & IndAS 36 & AS 28
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