Questions:
What is the main difference between how you handle impairment losses for patents under IFRS and US GAAP?

Our company has several patents that are recorded as a cost of $250 million in the 2023 balance sheet, with an accumulated amortisation of $25 million. Moreover, their accumulated losses from impairment are $80 million. In addition, the accumulated impairment reversals are $25 million. 

What will be the exact difference in dollars in the net valuation of these patents under IFRS and USGAAP?

Reference answers:
# IFRS

Under IFRS, the impairment losses previously recognised can be reversed, therefore, the value of the patents will get an increase equal to the reversals.

Value of the patents = cost - accumulated amortisation - impairment losses + impairment reversals

# US GAAP

According to the US GAAP, the impairment losses once recognized can never be reversed, therefore, they will not increase the value of the patents.

Value of the patents = cost - accumulated amortisation - impairment losses

# IFRS

- Value of the patents = cost - accumulated amortisation - impairment losses + impairment reversals

- Value of the patents = $250 million - $25 million - $80 million + $25 million 

- Value of the patents = $170 million

# US GAAP

- Value of the patents = cost - accumulated amortisation - impairment losses

- Value of the patents = $250 million - $25 million - $80 million 

- Value of the patents =  $145 million



The difference in the net valuation is $170 million - $145 million = $25 million