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    Limitations of Mfrs 136

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    Ros Shinie Balan
    The document discusses some limitations of MFRS 136 regarding impairment of assets. [1] MFRS 136 uses wording that is too complex, making it difficult for users to understand. [2] The requirements and calculations for impairment are complicated, requiring users to understand concepts like recoverable amount. [3] MFRS 136 mandates numerous disclosures for impairment losses, reversals, and recoverable amounts for each class of assets and cash-generating unit.

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    Limitations of Mfrs 136

    Uploaded by

    Ros Shinie Balan
    478 views3 pages
    The document discusses some limitations of MFRS 136 regarding impairment of assets. [1] MFRS 136 uses wording that is too complex, making it difficult for users to understand. [2] The requirements and calculations for impairment are complicated, requiring users to understand concepts like recoverable amount. [3] MFRS 136 mandates numerous disclosures for impairment losses, reversals, and recoverable amounts for each class of assets and cash-generating unit.

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    The document discusses some limitations of MFRS 136 regarding impairment of assets. [1] MFRS 136 uses wording that is too complex, making it difficult for users to understand. [2] The requirements and calculations for impairment are complicated, requiring users to understand concepts like recoverable amount. [3] MFRS 136 mandates numerous disclosures for impairment losses, reversals, and recoverable amounts for each class of assets and cash-generating unit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    478 views3 pages

    Limitations of Mfrs 136

    Uploaded by

    Ros Shinie Balan
    The document discusses some limitations of MFRS 136 regarding impairment of assets. [1] MFRS 136 uses wording that is too complex, making it difficult for users to understand. [2] The requirements and calculations for impairment are complicated, requiring users to understand concepts like recoverable amount. [3] MFRS 136 mandates numerous disclosures for impairment losses, reversals, and recoverable amounts for each class of assets and cash-generating unit.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    LIMITATIONS OF MFRS 136: IMPAIRMENT OF ASSET

    Regulators, standard setters and practitioners have expressed concerns that accounting

    standards and regulations have become too much and too complex and that this has resulted in

    negative consequences for the users. There are some limitations of the MFRS 136: impairment of

    asset.

    1) Too wordy

    The words used in MFRS 136 is too wordy and make the users difficult to understand the

    content. The users have to put more effort to acquire and process this information in order

    to understand it well. In order to process the information, the users have to repeat their

    readings two or three times. They also have to jot down the important information or make

    some notes for better understanding.

    2) Complicated

    The explanation in MFRS 136 are too complicated because there are too many elements

    should be reflected in the calculation of an assets value in use. There are also many

    requirements in identifying an asset that may be impaired. The users have to identify when

    recoverable amount shall be determined. These requirements use the term an asset but

    apply equally to an individual asset or a cash-generating unit. The users have to understand

    how to measure the recoverable amount of the asset. Besides, they also have to recognize

    and measure an impairment loss and it have several steps to follow to find those amount.
    3) Too many disclosure.

    An entity shall disclose the following for each class of assets:

    (a) The amount of impairment losses recognized in profit or loss during the period and the

    line item(s) of the statement of comprehensive income in which those impairment

    losses are included.

    (b) The amount of reversals of impairment losses recognized in profit or loss during the

    period and the line item(s) of the statement of comprehensive income in which those

    impairment losses are reversed.

    (c) The amount of impairment losses on revalued assets recognized in other comprehensive

    income during the period.

    (d) The amount of reversals of impairment losses on revalued assets recognized in other

    comprehensive income during the period


    An entity shall disclose the information required by (a)(f) for each cash-generating unit

    for which the carrying amount of goodwill or intangible assets with indefinite useful lives

    allocated to that unit.

    (a) The carrying amount of goodwill allocated to the unit (group of units).

    (b) The carrying amount of intangible assets with indefinite useful lives allocated to the

    unit (group of units).

    (c) The basis on which the units (group of units) recoverable amount has been determined

    (d) the units (group of units) recoverable amount if it is based on value in use:

    (e) If the units (group of units) recoverable amount is based on fair value less costs of

    disposal, the valuation technique(s) used to measure fair value less costs of disposal. An

    entity is not required to provide the disclosures required by MFRS 13.

    (f) If a reasonably possible change in a key assumption on which management has based

    its determination of the units (group of units) recoverable amount would cause the units

    (group of units) carrying amount to exceed its recoverable amount:

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