HKAS 36.126(a) & 130
In June 2014, a number of machines in the property development division
108were physically
damaged. The group assessed the recoverable amounts of those machines and as a result
the carrying amount of the machines was written down to their recoverable amount of
$6,230,000
109. An impairment loss of $1,200,000 was recognised in “Other operating
expenses”. The estimates of recoverable amount were based on the machines’ fair values
less costs of disposal, using market comparison approach by reference to recent sales price
of similar assets within the same industry, adjusted for differences such as remaining useful
lives
110. The fair value on which the recoverable amount is based on is categorised as a Level
3 measurement. The equipment was disposed of before the end of the year at approximately
its carrying amount at that time.
111(b) Company
Land and buildings held for own use carried at fair value
Plant, machinery and other fixed
assets Total fixed assets
$’000 $’000 $’000
Cost or valuation:
HKAS 16.73(d) At 1 January 2013 9,070 65,245 74,315
10th Sch(12(8)) &
HKAS 16.73(e)(i) Additions - 4,989 4,989
10th Sch(12(8)) &
HKAS 16.73(e)(ii) Disposals - (1,428) (1,428)
HKAS 16.73(e)(iv) Surplus on revaluation 1,171 - 1,171
Less: elimination of accumulated
depreciation (454) - (454) 10th Sch(5(3)(a)) & HKAS 16.73(d) At 31 December 2013 9,787 68,806 78,593 Representing: Cost - 68,806 68,806 10th Sch(12(7)) Valuation – 2013 9,787 - 9,787 9,787 68,806 78,593 HKAS 16.73(d) At 1 January 2014 9,787 68,806 78,593 10th Sch(12(8)) &
HKAS 16.73(e)(i) Additions - 13,366 13,366
10th Sch(12(8)) &
HKAS 16.73(e)(ii) Disposals - (2,042) (2,042)
HKAS 16.73(e)(iv) Surplus on revaluation 1,703 - 1,703
Less: elimination of accumulated
depreciation (515) - (515) 10th Sch(5(3)(a)) & HKAS 16.73(d) At 31 December 2014 10,975 80,130 91,105 Representing: Cost - 80,130 80,130 10th Sch(12(7)) Valuation – 2014 10,975 - 10,975 10,975 80,130 91,105
© 2014 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
83
Land and buildings held for own use carried at fair value
Plant, machinery and other fixed
assets Total fixed assets
$’000 $’000 $’000
Accumulated depreciation:
HKAS 16.73(d) At 1 January 2013 - 46,787 46,787
HKAS 16.73(e)(vii) Charge for the year 454 4,900 5,354
HKAS 16.73(e)(ii) Written back on disposals - (520) (520)
HKAS 16.73(e)(iv) Elimination on revaluation (454) - (454)
10th Sch(5(3)(b)) &
HKAS 16.73(d) At 31 December 2013 - 51,167 51,167
HKAS 16.73(d) At 1 January 2014 - 51,167 51,167
HKAS 16.73(e)(vii) Charge for the year 515 5,508 6,023
HKAS 16.73(e)(ii) Written back on disposals - (1,708) (1,708)
HKAS 16.73(e)(iv) Elimination on revaluation (515) - (515)
10th Sch(5(3)(b)) &
HKAS 16.73(d) At 31 December 2014 - 54,967 54,967
HKAS 16.73(e) Net book value:
At 31 December 2014 10,975 25,163 36,138
At 31 December 2013 9,787 17,639 27,426
HKAS 16.77(e)
Had the revalued properties held for own use been carried at cost less accumulated depreciation,
the carrying amounts would have been:
Group Company
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Freehold land and buildings 22,150 24,260 - -
Leasehold land and buildings 58,390 47,907 7,658 7,956
80,540 72,167 7,658 7,956
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HKAS 36.130 (c)(ii)
108 If an entity reports segment information in accordance with HKFRS 8, it should disclose for an individual asset the reportable
segment to which the asset belongs.
HKAS 36.130(e)
109 Recoverable amount of the impaired machines is disclosed as an additional disclosure for impaired non-financial assets as
required by HKAS 36.130(e), which has been modified by the amendments to HKAS 36 issued in 2013. See footnote 110 below for further details of the amendments.
HKFRS 13.7(c) HKAS 36.130 (e) & (f)
110 As stated in HKFRS 13.7(c), an asset whose recoverable amount is fair value less costs of disposal in accordance with HKAS
36 is outside the scope of HKFRS 13’s disclosure requirements. Instead, entities need to provide the disclosures required by paragraph 130 of HKAS 36 for an individual asset (including goodwill) or a cash-generating unit for which an impairment loss has been recognised or reversed during the period.
In June 2013, the HKICPA issued amendments to HKAS 36, Impairment of assets – Recoverable amount disclosures for non- financial assets to expand the disclosures required for an impaired asset or CGU whose recoverable amount is based on fair value less costs of disposal by amending the disclosure requirements of HKAS 36.130. The amendments are effective retrospectively for annual periods beginning on or after 1 January 2014. As allowed by the amendments, HK Listco early adopted the amendments in the financial statements for the year ended 31 December 2013.
Under the amended versions of paragraphs 130(e) and 130(f) of HKAS 36, entities need to provide the following additional information:
recoverable amount of the assets or CGU subject to impairment or impairment reversal; and if the recoverable amount is based on fair value less costs of disposal:
the level of the 3-Level fair value hierarchy (as defined in HKFRS 13) within which the fair value measurement is categorised;
for Level 2 and Level 3 fair value measurements:
- a description of the valuation technique(s) used to measure fair value less costs of disposal; - any change in valuation technique used and the reason(s) for making the change;
- key assumptions used in determining the fair value less costs of disposal; and
- discount rate used in the measurement if a present value technique is used for measuring fair value less costs of disposal.
HKAS 34.26 111 If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the
financial year, paragraph 26 of HKAS 34 requires the nature and amount of the change in estimate to be disclosed in a note to the annual financial statements unless a separate interim financial report is published for that final period. In Hong Kong, as typically an interim financial report is only published in respect of the first six months of the period, this disclosure requirement in HKAS 34.26 would apply to the annual financial statements whenever there is a significant change in the second half of the year to an estimate reported in the first half of the year.