(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009Section 27Impairment of AssetsObjective and scope27.1 An impairment loss occurs when the carrying amount of an asset exceeds itsrecoverable amount. This section shall be applied in accounting for theimpairment of all assets other than the following, for which other sections of thisIFRS establish impairment requirements:(a)(b)(c)(d)(e)deferred tax assets (see Section 29 Income Tax).assets arising from employee benefits (see Section 28 Employee Benefits).financial assets within the scope of Section 11 Basic Financial Instruments orSection 12 Other Financial Instruments Issues.investment property measured at fair value (see Section 16 InvestmentProperty).biological assets related to agricultural activity measured at fair value lessestimated costs to sell (see Section 34 Specialised Activities).Impairment of inventoriesSelling price less costs to complete and sell27.2 An entity shall assess at each reporting date whether any inventories areimpaired. The entity shall make the assessment by comparing the carryingamount of each item of inventory (or group of similar items—see paragraph 27.3)with its selling price less costs to complete and sell. If an item of inventory(or group of similar items) is impaired, the entity shall reduce the carryingamount of the inventory (or the group) to its selling price less costs to completeand sell. That reduction is an impairment loss and it is recognised immediatelyin profit or loss.27.3 If it is impracticable to determine the selling price less costs to complete and sellfor inventories item by item, the entity may group items of inventory relating tothe same product line that have similar purposes or end uses and are producedand marketed in the same geographical area for the purpose of assessingimpairment.Reversal of impairment27.4 An entity shall make a new assessment of selling price less costs to complete andsell at each subsequent reporting date. When the circumstances that previouslycaused inventories to be impaired no longer exist or when there is clear evidenceof an increase in selling price less costs to complete and sell because of changed158 © IASCF