Public Benefit Entities Exposure draft issued on impairment of revalued assets
The New Zealand Accounting Standards Board (“NZASB”) has issued Exposure Draft ED NZASB 2016-10 Impairment of Revalued Assets (Proposed Amendments to PBE IPSASs 21 and 26) (“the Exposure Draft”). The amendments proposed by the Exposure Draft are relevant to Tier 1 and Tier 2 public benefit entities (“PBEs”), which are those entities that apply PBE Standards or PBE Standards Reduced Disclosure Regime.
The Exposure Draft proposes amendments to:
- PBE IPSAS 17 Property, Plant and Equipment
- PBE IPSAS 21 Impairment of Non-Cash-Generating Assets
- PBE IPSAS 26 Impairment of Cash-Generating Assets
- PBE IPSAS 31 Intangible Assets.
The proposed amendments mirror recent changes made to International Public Sector Accounting Standards, which PBE Standards are based on.
The proposed amendments clarify that:
- Impairment of a revalued item of property, plant and equipment or a revalued intangible asset is accounted for in the same manner as a revaluation decrease (i.e. recognised in other comprehensive revenue and expense to the extent of the revaluation surplus for that class of assets and thereafter recognised in surplus or deficit)
- The reversal of impairment of a revalued item of property, plant and equipment or a revalued intangible asset is accounted for in the same manner as a revaluation increase (i.e. recognised in surplus or deficit to the extent that an impairment loss on the same class of revalued assets was previously recognised in surplus or deficit and thereafter recognised in other comprehensive revenue and expense)
- Where a revalued item of property, plant and equipment, or a revalued intangible asset, is impaired, it does not necessarily lead to a requirement to revalue the entire class of assets to which the impaired asset belongs.
These amendments will align the requirements for PBEs more closely with the requirements for for-profit entities.
It is proposed that the effective date for these amendments will be 1 January 2019, with early adoption permitted.
For more on the above, please contact your local BDO representative.
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