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ICB RTAP RESEARCH IAS36
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RTAP RESEARCH: Dissertation IAS36 Impairment of Assets.,Brief overview of IAS 36 and its significance in international
accounting
IAS 36, or International Accounting Standard 36, focuses on the impairment of assets. Its core
principle ensures that assets are not carried at more than their recoverable amount, which is the
higher of fair value less costs of disposal or value in use. Significance in international accounting:
1. Standardization: IAS 36 provides a standardized approach for assessing and reporting
impairments, promoting consistency and comparability across different entities and
jurisdictions [1].
2. Transparency: By requiring entities to assess assets for impairment regularly, IAS 36
enhances transparency in financial reporting, helping stakeholders make informed decisions
[6].
3. Investor Confidence: Adhering to IAS 36 increases investor confidence by ensuring that
asset values are accurately represented, reducing the risk of overvaluation [4].
4. Risk Management: It assists in risk management by prompting entities to recognize and
address potential declines in asset values promptly, mitigating financial risks [2].
5. Global Comparisons: Compliance with IAS 36 facilitates global comparisons of financial
statements, enabling investors and analysts to evaluate companies operating in different
countries on a level playing field [5].
🌐 Sources
1. IAS Plus - IAS 36 — Impairment of Assets
2. Grant Thornton Insights - IFRS - IAS 36 - Overview
3. IFRS - IAS 36 Impairment of Assets
4. CPDbox - IAS 36 Impairment of Assets
5. Grant Thornton - Insight into IAS 36
6. ICAEW - IAS 36 Impairment of Assets
, Overview of the major critiques to be explored in the dissertation.
Major critiques of IAS 36 include:
1. Subjectivity: Critics argue that the determination of recoverable amounts, especially using
techniques like fair value less costs of disposal, can be subjective and prone to manipulation
[5].
2. Complexity: The standard's guidance and calculations for impairment testing can be
complex and require significant professional judgment, leading to potential
misinterpretations or errors [4].
3. Timing of Recognition: Some argue that IAS 36 may delay the recognition of impairment
losses, as it requires assets to be tested only when there are indications of impairment,
potentially resulting in assets being carried at overstated amounts until impairment triggers
are met [5].
4. Applicability: Critics suggest that the standard may not adequately address the
complexities of certain industries or asset types, leading to inconsistent application and
comparability issues [3].
5. Disclosure Requirements: While the standard requires extensive disclosures about
impairment testing assumptions and results, some argue that these disclosures may not
always provide users with sufficient information to assess the impact of impairments on an
entity's financial position and performance [1].
🌐 Sources
1. IAS Plus - IAS 36 — Impairment of Assets
2. IFRS - IAS 36 Impairment of Assets
3. Grant Thornton - Insight into IAS 36
4. ICAEW - IAS 36 Impairment of Assets
5. PwC - Impairment of non-financial assets - common mistakes
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