IFRS and GAAP - Impairment reversals

CFA Level II
#1

  1. Am I correct that IFRS allows for impairment reversals of long-lived assets, however GAAP does not.

  2. Am I correct that both IFRS and GAAP does not allow for impairment reversals of investments in associates?

Hence, the only assets IFRS allows impairment reversals for are long-lived assets or are there any others too?

GAAP does not allow reversal of impairment of any asset?

#2

  1. Correct

  2. IFRS does allow reversals of any long term asset (not only PPE (if this what you meant) but not over the amount of beginning recognition in BS (beginning entry).

#3

Yes, I wrote long-lived assets. Not only PPE. But am I correct that IFRS also allows for reversals of impairments of available for sale debt? It seems these can be reversed through P&L?

In short, which otehr assets than long-lived assets does IFRS allow reversal of impairments?

GAAP does not allow reversal of impairment of any asset?

#4

AFS securities are already shown based on fair value (mark to market prnciple) so impairment and reversals are straightfowrad actions through its price adjustements on market value and showing non-realized loss/gains in OCI.

HTM securites as financial asset for example. Investments into real estates for lease purpose as another example.

I would say so based on information in CFAI curriculum. Subsequents impairment reversals are not permitted under USGAAP at all.

Also note that IFRS does not permit reversal over the beginning entry balance value.

#5

Are you certain about HTM and available for sale? From the book: "…the previously recognized impairment loss can be reversed either directly (by increasing the carrying value of the security) or by adjusting the allowance account. The amount of this reversal is then recognized in profit or loss.

However, impairment losses on available-for-sale debt securities can be reversed if a subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognized in profit or loss. In this case, the impairment loss is reversed with the amount of the reversal recognized in profit or loss.

#6

II would say that standard distuingish prior realized impairment loss before reclassifying to AFS category (eg. from move from HTM to AFS) than decay in market value after stock has been categoriozed as an AFS security.