In this Presentation, discussed overview of Accounting Standard-136. 1. Purpose & Scope 2. Impairment of Assets 3. Cash-Generating Units 4. Recoverable Amount 5. Impairment Loss Recognition 6. Reversal of Impairment Loss 7. Disclosure Requirement

1. Introduction to
Accounting Standard
136
Accounting Standard 136 provides guidance on assessing and
recognizing the impairment of assets, ensuring that companies accurately
report the true value of their assets on financial statements.
Dr DEEPAN A

2. Purpose and Scope
1 Asset Valuation
The standard helps
organizations determine
if an asset's carrying
value exceeds its
recoverable amount,
indicating impairment.
2 Consistent
Reporting
It establishes a
framework for
recognizing and
measuring impairment
losses, promoting
comparability across
financial statements.
3 Scope
The standard applies to
a wide range of assets,
including property, plant,
equipment, intangibles,
and investments.

3. Impairment of Assets
Definition
Asset impairment occurs
when an asset's carrying
value exceeds its recoverable
amount, leading to a
permanent decline in value.
Triggers
Factors like technological
obsolescence, physical
damage, or market changes
can indicate potential asset
impairment.
Implications
Recognizing impairment is
crucial, as it impacts a
company's financial position
and performance.

4. Cash-Generating Units
Identification
Assets are grouped into
cash-generating units
(CGUs), the smallest
identifiable group that
generates cash inflows.
Allocation
Goodwill and corporate
assets are allocated to CGUs
to enable impairment testing
at the appropriate level.
Interdependence
CGUs reflect the level at
which an organization
manages its assets and
monitors its operations.

5. Recoverable Amount
Definition
The recoverable amount is the higher of an
asset's fair value less costs to sell and its
value in use.
Fair Value
Fair value is the price that would be received
to sell an asset in an orderly transaction.
Value in Use
Value in use is the present value of the future
cash flows expected to be derived from the
asset.
Comparison
The recoverable amount is the higher of
these two values, representing the asset's
true economic worth.

6. Impairment Loss Recognition
Identification
Assess if an asset's
carrying amount
exceeds its
recoverable amount,
indicating potential
impairment.
Measurement
Determine the
impairment loss as
the difference
between the asset's
carrying amount and
recoverable amount.
Recognition
Record the
impairment loss in the
income statement,
reducing the asset's
carrying value.
Timing
Impairment losses are
recognized when the
condition occurs, not
deferred or averaged
over time.

7. Reversal of Impairment Loss
1
Trigger
A change in the estimates used to
determine the asset's recoverable
amount may indicate a reversal. 2 Limit
The reversal cannot exceed the
carrying amount that would have been
determined had no impairment loss
been recognized.
3
Accounting
Reversals are recognized in the
income statement, increasing the
asset's carrying value.

8. Disclosure Requirements
Impairment Losses Amounts recognized for each class of asset,
and the events and circumstances leading to
the recognition.
Reversals Amounts recognized for each class of asset,
and the events and circumstances leading to
the reversal.
Assumptions Key assumptions used in determining the
recoverable amount of assets.
Uncertainties Significant uncertainties that could impact the
recoverable amount estimates.