Why is impairment loss a management judgement? Aren't the rules for an IL clearly laid out in IAS 36? and one more doubt ,what exactly is the third party evidence to be obtained with respect to the impairment?
It’s a management judgment call, as the impairment calculation involves subjective estimates. Eg the fair value less costs to sell - it’s a judgment….what the asset could be sold For Eg the value in use - it’s a judgement….what discount rather should be used, what should the forecast cash flows be
It’s all about common sense and being critical about most of the things… thank you so much sir!
Why is impairment loss a management judgement? Aren't the rules for an IL clearly laid out in IAS 36? and one more doubt ,what exactly is the third party evidence to be obtained with respect to the impairment?
It’s a management judgment call, as the impairment calculation involves subjective estimates.
Eg the fair value less costs to sell - it’s a judgment….what the asset could be sold
For
Eg the value in use - it’s a judgement….what discount rather should be used, what should the forecast cash flows be
Thanks Ben, another useful video 😁
Very helpful