Accounting Standards 1-29 - Seth & Associates

forecasting cash flows. This results in an increase in the estimated future cash flows
used to determine value in use at the end of 20X0. As a consequence, in
accordance with paragraphs 94-95 of this Statement, the recoverable amount of the
plane is recalculated at the end of 20X4.
Schedule 3. Calculation of the plane’s value in use at the end of 20X4 (Amount in
Rs. lakhs)
Year Future cash flows(1) Discounted at 14%
20X5 303.21 265.97
20X6 327.50 252.00
20X7 317.21 214.11
20X8 319.50 189.17
20X9 331.00 171.91
20X10 279.99 127.56
Value in use 1,220.72
(1) Includes estimated benefits expected from the renewal of the engine reflected in management budgets.
A57. The plane’s recoverable amount (value in use) is higher than the plane’s
carrying amount and depreciated historical cost (see Schedule 4). Therefore, K
reverses the impairment loss recognised for the plane at the end of 20X0 so that the
plane is carried at depreciated historical cost.
Schedule 4. Calculation of the reversal of the impairment loss at the end of 20X4
(Amount in Rs. lakhs)
Plane
Carrying amount at the end of 20X0 (Schedule 2) 1,211.28
End of 20X4
Depreciation charge (20X1 to 20X4-Schedule 5) (484.52)
Renewal expenditure 250.00
Carrying amount before reversal 976.76
Recoverable amount (Schedule 3) 1,220.72
Reversal of the impairment loss 173.24
Carrying amount after reversal 1,150.00
Carrying amount: depreciated historical cost (Schedule 5) 1,150.00(1)
(1) The value in use of the plane exceeds what its carrying amount would have been at depreciated historical
cost. Therefore, the reversal is limited to an amount that does not result in the carrying amount of the plane
exceeding depreciated historical cost.