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CMA Final · Corporate Financial Reporting · Impairment of Assets (Ind AS 36)

Meera Ltd. has a plant with carrying amount Rs 80 lakh after an impairment loss of Rs 20 lakh recognised two years ago; the original depreciated carrying amount would otherwise now be Rs 95 lakh (no impairment ever). At the reporting date its recoverable amount is Rs 120 lakh. Ignoring revaluation, what is the maximum reversal of impairment loss that can be recognised?

The maximum reversal is Rs 15 lakh. The asset's carrying amount after reversal cannot exceed the depreciated carrying amount it would have had without any impairment, Rs 95 lakh, even though recoverable amount is Rs 120 lakh. So 95 less 80 gives Rs 15 lakh.

  1. ARs 40 lakh
  2. BRs 15 lakhCorrect
  3. CRs 25 lakh
  4. DRs 20 lakh

Explanation

The increased carrying amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment been recognised, which is Rs 95 lakh. Maximum reversal = 95 - 80 = Rs 15 lakh. Rs 40 lakh uses recoverable amount and ignores the ceiling.

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