Which statement about impairment disclosures under IAS 36 is correct?

Which statement about impairment disclosures under IAS 36 is correct?

• A. Disclosures include the value of impairment losses and where they are charged in P&L
• B. Disclosures are optional
• C. Disclosures are limited to cash flow effects
• D. Disclosures require the full original cost of the asset to be shown

Answer: (A)

Impairment disclosures under IAS 36 focus on the amount of the impairment loss recognised and where that loss is charged in the profit or loss. When an asset’s carrying amount exceeds its recoverable amount, an impairment loss is recognised in P&L, and the standard requires disclosure of the amount of that loss and the line item in which it appears, so users can see how much profit or loss has been affected and where the charge sits in the financial statements. This transparency also extends to other related information, such as the events leading to the impairment and the methods and key assumptions used to determine recoverable amount, but the essential point is the disclosed impairment amount and its presentation in P&L. The other statements aren’t correct because disclosures aren’t optional, they cover more than just cash flow effects (they include non-cash impairment charges), and there’s no requirement to show the full original cost of the asset in these disclosures.

Impairment disclosures under IAS 36 focus on the amount of the impairment loss recognised and where that loss is charged in the profit or loss. When an asset’s carrying amount exceeds its recoverable amount, an impairment loss is recognised in P&L, and the standard requires disclosure of the amount of that loss and the line item in which it appears, so users can see how much profit or loss has been affected and where the charge sits in the financial statements. This transparency also extends to other related information, such as the events leading to the impairment and the methods and key assumptions used to determine recoverable amount, but the essential point is the disclosed impairment amount and its presentation in P&L. The other statements aren’t correct because disclosures aren’t optional, they cover more than just cash flow effects (they include non-cash impairment charges), and there’s no requirement to show the full original cost of the asset in these disclosures.