Analysis of Fair Value and Recoverable Amount in Corporate Accounting
VerifiedAdded on 2023/06/13
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This report provides an overview of fair value and recoverable amount concepts within the context of corporate accounting, focusing on their application under International Financial Reporting Standards (IFRS). It explains the recoverable amount as the higher of an asset's fair value less costs of disposal and its value in use, which represents the present value of future cash flows expected from the asset. The report references IAS 36, which guides accountants in determining impairment of fixed assets. It also discusses how fair value is measured according to IFRS 13, including the market, cost, and income approaches. Key factors in determining an asset's value-in-use, such as cash flow, discount rate, and other relevant considerations like credit stability and liquidity, are also examined. The report concludes by emphasizing that the fair value less cost to sell is the price received from selling an asset less the costs to make the sale, aligning with IFRS 5 measurement basis.
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