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CA Final · Financial Reporting · Ind AS 36 Impairment of Assets

Aarav Textiles Ltd. tests Ind AS 36 compliance for its investment property portfolio. A trainee says that, as in IAS 36, the standard scope includes investment property measured at fair value, so paragraph 2(f) should be applied. Which response is correct under Ind AS 36 as notified in India?

Paragraph 2(f) is deleted in Ind AS 36 because Ind AS 40 requires the cost model for investment property. The paragraph number is retained only to stay consistent with IAS 36, and paragraph 5 was modified to remove the reference to fair value measurement of investment property.

  1. AParagraph 2(f) applies, because fair value investment property must be tested annually for impairment
  2. BParagraph 2(f) is deleted in Ind AS 36 because Ind AS 40 requires the cost model, with the paragraph number retainedCorrect
  3. CParagraph 2(f) is retained but applies only to listed companies
  4. DParagraph 2(f) is replaced by a rule that investment property is never tested for impairment

Explanation

Per the comparison with IAS 36, paragraph 2(f) is deleted in Ind AS 36 as Ind AS 40 requires the cost model; the number is kept for consistency. Paragraph 5 was also modified by deleting the reference to fair value measurement of investment property. Hence the trainee's reliance on fair value investment property is misplaced.

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