Assignment | Revaluations and Impairment Testing of Non-current Assets

Running head: REVALUATIONS AND IMPAIRMENT TESTING OF NON-CURRENT
ASSETS
Revaluations and Impairment Testing of Non-Current Assets
Name of the Student
Name of the University
Author’s Note

REVALUATIONS AND IMPAIRMENT TESTING OF NON-CURRENT ASSETS1
Table of Contents
Answer to Question 1.................................................................................................................2
Requirement (a)......................................................................................................................2
Requirement (b).....................................................................................................................2
Requirement (c)......................................................................................................................2
Answer to Question 2.................................................................................................................3
Answer to Question 3.................................................................................................................3
Requirement (a)......................................................................................................................3
Requirement (b).....................................................................................................................3
Requirement (c)......................................................................................................................4
References..................................................................................................................................5

REVALUATIONS AND IMPAIRMENT TESTING OF NON-CURRENT ASSETS2
Answer to Question 1
Requirement (a)
AASB 13/IFRS 13 provides the necessary rules and regulations of the assets’ and
liabilities’ fair valuation and necessary disclosures. It states that the fair value of assets and
liabilities is considered as current market price of the same. It states that it is needed to pay
the net realizable value of assets and liabilities for meeting the liability obligation and this
needs to be considered as the fair value of the assets and liabilities. As per AASB 13/IFRS
13, an active market of the object should be there and it is needed to consider the best price
quotes for the valuation purpose (aasb.gov.au, 2019). It states that there is no need of the
identification of market participants individually. According to Paragraph 22 of AASB 13,
there is no need to identify the market participants in case fair valuation, but it is needed to
use the assumptions of market participants (aasb.gov.au, 2019).
Requirement (b)
There is a need to use market participant assumptions at the time to measure the assets
and liabilities in fair value. Every expected cash flow needs to be considered along with
appropriate discount in order to measure the asset values. As per AASB 13, Appendix A, it is
needed to use the risk assumption at the time to consider the concept of market participants of
fair value (aasb.gov.au, 2019). It is needed to take into account the inherent risk factors.
Thus, it is needed to consider the rational behaviour of a market participants as a market
participant assumption at the time to use the technique of fair value.
Requirement (c)
AASB 13/IFRS 13 requires to use the market price at the time to do the fair valuation
of the assets and liabilities (iasplus.com, 2019). The recent and best price needs to be taken
into consideration as a fair value without any adjustment in the transactions of identical assets
and liabilities. In case the item is unobservable and unidentifiable, then it is needed to
consider the best assumption from the market participant perspective with judiciousness
(Hodder, Hopkins & Schipper, 2014). However, in case there is availability of market price
for the same item, then it is not possible to neglect the price quote at the time to apply the fair
value technique. Thus, in this kind of situation, it is needed to take into consideration the
market participant’s price quote for fair value (aasb.gov.au, 2019).