Document ID: chunk:federal_register_of_legislation:F2023C00180:front:0:p52
Version: federal_register_of_legislation:F2023C00180
Segment Type: other
Provision Reference: 
Character Range: 140028–145577

recognises the deferred tax asset to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.

Example 4 Reversal of an impairment loss
Use the data for entity T as presented in Example 2, with supplementary information as provided in this example. In this example, tax effects are ignored.

Background
IE38 In 20X3, the government is still in office in Country A, but the business situation is improving. The effects of the export laws on T's production are proving to be less drastic than initially expected by management. As a result, management estimates that production will increase by 30 per cent. This favourable change requires T to re-estimate the recoverable amount of the net assets of the Country A operations (see paragraphs 110 and 111 of AASB 136). The cash-generating unit for the net assets of the Country A operations is still the Country A operations.
IE39 Calculations similar to those in Example 2 show that the recoverable amount of the Country A cash-generating unit is now CU1,910.

Reversal of impairment loss
IE40 T compares the recoverable amount and the net carrying amount of the Country A cash-generating unit.
Schedule 1. Calculation of the carrying amount of the Country A cash-generating unit at the end of 20X3

                                                                                                                                                                                                                                                                           Goodwill  Identifiable assets  Total

                                                                                                                                                                                                                                                                           CU        CU                   CU
Beginning of 20X2 (Example 2)
Historical cost                                                                                                                                                                                                                                                            1,000                          2,000     3,000
Accumulated depreciation                                                                                                                                                                                                                                                   –                              (167)     (167)
Impairment loss                                                                                                                                                                                                                                                            (1,000)                        (473)     (1,473)
Carrying amount after impairment loss                                                                                                                                                                                                                                      –                              1,360     1,360

End of 20X3
Additional depreciation (2 years)(a)                                                                                                                                                                                                                                       –                              (247)     (247)
Carrying amount                                                                                                                                                                                                                                                            –                              1,113     1,113
Recoverable amount                                                                                                                                                                                                                                                                                                  1,910
Excess of recoverable amount over carrying amount                                                                                                                                                                                                                                                                   797

  (a)  After recognition of the impairment loss at the beginning of 20X2, T revised the depreciation charge for the Country A identifiable assets (from CU166.7 per year to CU123.6 per year), based on the revised carrying amount and remaining useful life (11 years).

IE41 There has been a favourable change in the estimates used to determine the recoverable amount of the Country A net assets since the last impairment loss was recognised. Therefore, in accordance with paragraph 114 of AASB 136, T recognises a reversal of the impairment loss recognised in 20X2.
IE42 In accordance with paragraphs 122 and 123 of AASB 136, T increases the carrying amount of the Country A identifiable assets by CU387 (see Schedule 3), ie up to the lower of recoverable amount (CU1,910) and the identifiable assets' depreciated historical cost (CU1,500) (see Schedule 2). This increase is recognised immediately in profit or loss.
IE43 In accordance with paragraph 124 of AASB 136, the impairment loss on goodwill is not reversed.
Schedule 2. Determination of the depreciated