IAS 36: Recoverable Amounts - Disclosures for Non-Financial Assets

The IASB amended the disclosures requirements in paragraph 134 of IAS 36 Impairment of Assets regarding the measurement of the recoverable amount of impaired assets in May 2012 when it published IFRS 13 Fair Value Measurement.
IFRS 13 will be effective from 1 January 2013.

These amendments to IAS 36 were aimed to align IAS 36 with the disclosures requirements in US GAAP about impaired assets and to require additional disclosures when the recoverable amount of assets was based on Fair Value Less Cost of Disposal (the 'FVLCD').

In December 2012, the IASB acknowledged that the amendments actually resulted in requiring the additional disclosures of the recoverable amount of any cash-generating unit (or group of units) for which the carrying amount of goodwill or intangible assets with indefinitive useful life allocated to that unit (or group of units) is significant in comparison with the entity's total carrying amount of goodwill or intangible assets with indefinitive useful life.

Furthermore, the IASB noted that these disclosures should have been placed in paragraph 130 which deals with disclosures requirements for each material impairment loss recognised or reversed during the period for an individual asset or cash-generating unit whose recoverable amount is FVLCD.

Therefore, the IASB decided to issue an exposure draft to address this issue by removing from paragraph 134 of IAS 36 references to the recoverable amount of assets and adding them to paragraph 130 together with the additional disclosures requirements added by IFRS 13.

Furthermore, the IASB also noted that the Exposure Draft ED/2012/1 Annual Improvements to IFRSs 2010-2012 Cycle included a proposed amendment to paragraph 130 of IAS 36 aimed at clarifying that an entity should disclose the discount rate used in measuring FVLCD by using a present value technique. Therefore, the IASB decided to combine the proposal from the ED/2012/1 with the amendments discussed above and to address all changes to the recoverable amount disclosures in a separate ED.

On 18 January 2013, the IASB published for public comment the exposure draft ED/2013/1. The IASB requested comments on the exposure draft by 19 March 2013.

EFRAG issued its draft comment letter in January 2013 where it tentatively agreed with the proposal as it removed burdensome disclosures without reducing the relevance and understandability of the financial information.

After having consulted its constituents, EFRAG issued in March 2013 its final comment letter where it agreed with the proposal as it removed burdensome and unintended disclosures requirements without reducing the relevance and understandability of the financial information.

On 29 May 2013, the IASB issued its amendments to IAS 36. On 15 July 2013, after a short consultation period, EFRAG completed its due process regarding the amendments to IAS 36 on Recoverable Amount Disclosures for Non-Financial Assets ('the Amendments') and submitted its Endorsement Advice Letter and Effects Study Report to the European Commission. EFRAG supported the adoption of the Amendments and recommended their endorsement. EFRAG's recommendation is explained in the letter to the European Commission, and the accompanying Basis for Conclusions and the Effects Study Report on the costs and benefits of implementing the Amendments.

The amendments were published in the official journal on 20 December 2013.