PSAK 48 - IMPAIRMENT

Summary

This video presentation covers PSAK 48, the Indonesian accounting standard for impairment of assets. It outlines the standard's goals, which include preventing assets from being recorded above their recoverable amounts. The script explores the scope of PSAK 48, key terms like impairment, fair value, and value in use, and details the process of impairment testing and measurement. Special considerations for goodwill and asset grouping are discussed, along with practical examples of how impairment losses are allocated. The video aims to provide a clear understanding of PSAK 48 and its application in financial reporting.

Takeaways

• 😀 PSAK 48 is an Indonesian accounting standard that focuses on asset impairment, ensuring assets are not carried at values exceeding their recoverable amounts.
• 😀 The primary objective of PSAK 48 is to establish procedures for asset impairment testing, ensuring assets are written down when their carrying amounts exceed recoverable amounts.
• 😀 PSAK 48 applies to all asset types except for 8 specific asset categories, such as inventories, tax assets, and financial instruments under other PSAKs.
• 😀 Impairment, also called 'impairment loss,' occurs when the carrying amount of an asset exceeds its recoverable amount (either fair value or value in use).
• 😀 Regular impairment testing is required for certain assets, including intangible assets with indefinite useful lives and goodwill arising from business combinations.
• 😀 Entities must perform impairment tests at least annually for goodwill and intangible assets with indefinite lives, and more frequently if there are signs of impairment.
• 😀 The recoverable amount of an asset is determined by comparing its fair value less costs to sell and its value in use, with the higher value being chosen.
• 😀 Fair value represents the price an asset can be sold for in an active market, minus the selling costs, while value in use is the discounted cash flow expected from the asset.
• 😀 Impairment testing considers both external factors (e.g., market changes, legal changes) and internal factors (e.g., physical damage, underperformance).
• 😀 Goodwill must be allocated to cash-generating units (CGUs) for impairment testing. Impairment losses on goodwill cannot be reversed, and losses are allocated to the assets of the CGU.

Q & A

What is the main purpose of PSAK 48?

The main purpose of PSAK 48 is to establish procedures for ensuring that assets are not recorded above their recoverable amount. It sets out how to test and account for impairment of assets to prevent overstatement in financial statements.

What are the assets excluded from the scope of PSAK 48?

PSAK 48 does not apply to the following assets: inventory, assets from construction contracts, deferred tax assets, employee benefits assets, financial assets under PSAK 55, investment properties measured at fair value, deferred acquisition costs, and non-current assets held for sale as per PSAK 58.

How does PSAK 48 define impairment?

Impairment is defined as a permanent reduction in the value of an asset. It is the difference between an asset's carrying amount and its recoverable amount, which is the higher of its fair value less costs to sell or its value in use.

What is the 'carrying amount' of an asset?

The carrying amount is the value at which an asset is recognized on the balance sheet, adjusted for any accumulated depreciation or impairment losses.

What is meant by the 'recoverable amount' of an asset?

The recoverable amount of an asset is the higher of its fair value less the cost to sell or its value in use. It represents the maximum amount that can be recovered from the asset through its sale or continued use.

What is the difference between fair value and value in use?

Fair value is the amount obtainable from selling an asset in an orderly transaction between knowledgeable parties, less costs to sell. Value in use is the present value of expected future cash flows from an asset, considering the time value of money and risks specific to the asset.

How is impairment tested in PSAK 48?

Impairment is tested by comparing an asset's carrying amount to its recoverable amount. If the carrying amount exceeds the recoverable amount, an impairment loss is recognized. The test can be triggered by external indicators (like changes in market value or economic conditions) or internal indicators (such as physical damage or underperformance).

What types of assets are subject to annual impairment testing under PSAK 48?

Assets such as goodwill, intangible assets with indefinite useful lives, and intangible assets not yet in use are subject to annual impairment testing. These are tested even if there is no indication of impairment.

What is the role of 'goodwill' in impairment testing?

Goodwill acquired in a business combination is allocated to cash-generating units (CGUs) for impairment testing. It must be tested for impairment at least annually, and any impairment loss is allocated first to goodwill, then to the assets of the CGU.

How are impairment losses allocated within a cash-generating unit (CGU)?

When an impairment loss is recognized for a CGU, it is allocated pro-rata across the assets of the CGU, based on their carrying amounts. However, goodwill is allocated first, followed by other assets in the unit.