Impairment Loss Reversals

At each balance sheet date, you should assess whether any impairment loss recognized in prior accounting periods no longer exists or has decreased. In either case, you should then estimate the recoverable amount of that asset.

If the estimated recoverable cost is more than the carrying cost of the asset, then the impairment loss recognized earlier must be reversed to the extent that the estimated recoverable cost exceeds the carrying cost of the asset.

After reversal, the carrying amount of an asset should not exceed the lower of:

• Estimated recoverable cost

• Carrying cost that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods

The recoverable amount is the higher of the net selling price or the value in use.

The impairment loss to be reversed is calculated as follows:

• Recoverable amount is more than the historical net book value:

  • Impairment Loss Reversal = Historical Net Book Value - Net Book Value

• Recoverable amount is less than the historical net book value:

  • Impairment loss Reversal = Recoverable Amount - Net Book Value