Skip To Content | Contact Us | About AASB | Links

AASB on Twitter AASB on LinkedIn




30 Jun. 2016

Simplified impairment requirements bring cost savings to Australian NFPs

If you are an NFP entity with specialised assets, you will be pleased to know that impairment requirements for such assets have been simplified.

Kris Peach, Chair of the AASB said “NFP public sector entities holding non-cash-generating specialised assets at fair value in accordance with AASB 13 Fair Value Measurement no longer need consider AASB 136 Impairment of Assets.  NFP entities (such as charities) holding such assets at cost will determine recoverable amounts using current replacement cost in AASB 13. The proposed amendments will simplify and clarify impairment testing for all NFPs”.

Kris Peach, Chair of the AASB said “The amendments are long overdue as stakeholders have been confused about how current replacement cost as a measure of fair value under AASB 13 and depreciated replacement cost as a measure of value in use under AASB 136 interact”.

The AASB noted that current replacement cost reflects obsolescence, including intentions to scrap assets, and accordingly there is no need for a separate impairment test, when assets are regularly revalued. In practice depreciated replacement cost and current replacement cost have been used interchangeably and these amendments reflect practice.
Kris Peach noted “the AASB is committed to simplifying reporting requirements where feasible and exploring ways to reduce costs for preparers and enhance the usefulness of information to users.”