Impairment: IFRS vs GAAP

CFA Level I FRA
#1

In the Schweser, it says regarding long lived assets,

under IFRS, the amount impaired is its carrying value less the recoverable amount, which is the greater of the fair value less selling cost(this is net realizable value, right?) and its value in use.

Under GAAP, the amount impaired is the excess of carrying value over the FAIR VALUE(not NRV?) or the PV of future cash flows if the FAIR VALUE is not known.

I got to wonder if the expressions above are literal. I mean, under IFRS do you compare BV to the NRV, and under GAAP you compare BV to the FAIR VALUE, not NRV?

or is it implied that FAIR VALUE means NRV??

Much thanks, guys

#2

I FRS - Impairment 1 step approach

Asset should be impaired if its BV (cost of purchase - accumulated deprecaition if exists) is > recoveravle amount.

Recovareable amunt is greater (higher amount) of:

a) fair value - cost of selling

and

b) value in use (PV of future CF thus DCF value )

Loss reversals are permitted but only to the original amount of prior impairment.

USGAAP - Impairment 2 steps approach

  1. step - recoverability test - asset should be impaied if its BV > undiscounted future cash flows

2 .step - if impaired asset is written down to fair value (loss is excess of BV - fair value) or discounted future cash flows, which is greater

Loss reversals are not permitted under USGAAP.

#3

Flashback clearly explained it well, so no addition.