Entire Document - Chris Hani District Municipality

5. IMPAIRMENT OF ASSETS (continued)1.2Impairment of Non-cash Generating AssetsThe municipality assesses at each reporting date whether there is any indication thatan asset may be impaired.If there is any indication that an asset may be impaired, the recoverable serviceamount is estimated for the individual asset. If it is not possible to estimate therecoverable service amount of the individual asset, the recoverable service amountof the non-cash generating unit to which the asset belongs is determined.The recoverable service amount of a non-cash generating asset is the higher of itsfair value less costs to sell and its value in use. The value in use for a non-cashgenerating asset is the present value of the asset’s remaining service potential.If the recoverable service amount of an asset is less than its carrying amount, thecarrying amount of the asset is reduced to its recoverable service amount. Thatreduction is an impairment loss.Chapter 4An impairment loss of assets carried at cost less any accumulated depreciation oramortisation is recognised immediately in surplus or deficit.An impairment loss is recognised for non-cash generating units if the recoverableservice amount of the unit is less than the carrying amount of the unit. The impairmentloss is allocated to reduce the carrying amount of the assets of the unit as follows:♦To the assets of the unit, pro rata on the basis of the carrying amount of eachasset in the unit.The municipality assesses at each reporting date whether there is any indication thatan impairment loss recognised in prior periods for assets may no longer exist or mayhave decreased. If any such indication exists, the recoverable service amounts ofthose assets are estimated.The increased carrying amount of an asset attributable to a reversal of an impairmentloss does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset in prior periods.A reversal of an impairment loss of assets carried at cost less accumulated depreciationor amortisation is recognised immediately in surplus or deficit.253