Hi, all :
On CFAI text Vol 3, P. 467 under 5.1 Reversals of Impairments of Long-Lived Assets
The 4th line stated : IFRS permit impairment losses to be _ reverses _ if the _ recoverable _ amount of an asset increases regardless of whether the asset is held for use or held for sales.
My question : reverse = recover ?
Thanks !
I don’t understand your question of reverse=recover. But I think I understand the section you are quoting. And to me the section in the book actually even gives a pretty good example (impaired patent). You own a patent which you value at 100. All of a sudden a competitor uses the method protected by the patent. The value of your asset goes down, even though you filed a lawsuit for patent infringement. You would have to write off the asset, from 100 to 0. After you successfully won the lawsuit, you can write the asset back up to its original value of 100. Important to note that you are not allowed to exceed your original value - so you couldn’t write up more than what you had previously written off.
Is this what you wanted to know?
When the book says ‘recoverable amount’ they are talking about a figure i.e. a GBP or $. How much in monetary term has been written down and could subsequently regained.
When the books say ‘reverse’ it is an adjective i.e. to reverse, or to regain that amount, to go back on oneself.
So the sentence is telling you that you:
IFRS will allow you to regain (recuperate) an amount. This is amount is the recoverable amount.
Hi, pokhim :
Thanks for your response and I am sorry for my poor engilsh because english is not my native language.
So can I say : IFRS permit impairment losses to be _ recovered _ if the recoverable amount of an asset increases regardless of whether the asset is held for use or held for sales ?
It seems to me that “reverse” and “recover” can used interchangeably.
It is possible to use them interchangeably.