The New Zealand Accounting Standards Board (NZASB) has published for comment ED NZASB 2016-10 Impairment of Revalued Assets (Proposed Amendments to PBE IPSASs 21 and 26) (ED NZASB 2016-10).
Where an item of revalued property, plant and equipment is damaged (for example, in a fire) or no longer available for use (for example, as a consequence of the enactment of legislation), there is some uncertainty about the requirements relating to the recognition of an impairment loss.
The issue is whether the entire class of assets needs to be revalued (in accordance with paragraph 51 of PBE IPSAS 17 Property, Plant and Equipment) when the impairment loss on the damaged/unusable property, plant and equipment is recognised.
ED NZASB 2016-10 proposes to include property, plant and equipment and intangible assets carried at revalued amounts within the scope of PBE IPSAS 21 Impairment of Non-Cash-Generating Assets and PBE IPSAS 26 Impairment of Cash Generating Assets.
The proposals also clarify that an impairment loss recognised (or reversals of impairment losses previously recognised) on revalued assets does not necessarily require an entity to revalue the entire class of assets to which that asset (or group of assets) belongs.
The proposals also include disclosure requirements. However, we are not proposing any disclosure concessions for Tier 2 public benefit entities because there are no disclosure concessions for the same disclosures in NZ IAS 36 Impairment of Assets.
The proposals in ED NZASB 2016-10 are relevant for Tier 1 and Tier 2 public benefit entities.
The NZASB encourages you to consider how these proposals will affect your entity and invites you to comment.
Send your comments—both formal and informal—by 20 February 2017 to the NZASB as follows:
EITHER by post addressed to the:
External Reporting Board
PO Box 11250
Manners Street Central
OR by email to firstname.lastname@example.org.
We would appreciate receiving a copy of your submission in electronic form (preferably Microsoft Word format). This helps us to efficiently collate and analyse comments. Any electronic file should also specify the exposure draft (ED) number and title.
Please note in your submission on whose behalf the submission is being made (for example own behalf, a group of people, or an entity).
We intend publishing all submissions on the XRB website (www.xrb.govt.nz), unless the submission may be defamatory. If you have any objection to publication of your submission, we will not publish it on the internet. However, it will remain subject to the Official Information Act 1982 and, therefore, it may be released in part or in full. The Privacy Act 1993 also applies.
If you object to the release of any information contained in your submission, we would appreciate you identifying the parts of your submission to be withheld, and the grounds under the Official Information Act 1982 for doing so (e.g. that it would be likely to unfairly prejudice the commercial position of the person providing the information).
Click here to read the Invitation to Comment and Exposure Draft.