PSAK 48 - IMPAIRMENT

Introduction

This tutorial provides a comprehensive guide on PSAK 48, focusing on the impairment of assets. Understanding impairment is crucial for accounting professionals, as it affects the financial statements and overall financial health of an entity. This guide will break down the key concepts and steps outlined in the video for better comprehension and application.

Step 1: Understand the Concept of Impairment

• Impairment occurs when the carrying amount of an asset exceeds its recoverable amount.
• Key terms:
  • Carrying amount: The value at which an asset is recognized on the balance sheet.
  • Recoverable amount: The higher of an asset's fair value less costs to sell and its value in use.
• Identify situations that may indicate impairment, such as:
  • Significant decline in market value.
  • Changes in technology, market, or economic conditions.
  • Legal or regulatory changes affecting asset usage.

Step 2: Determine the Recoverable Amount

• To assess impairment, calculate the recoverable amount of the asset:

  1. Fair Value Less Costs to Sell: Estimate the price that could be obtained from selling the asset, minus any selling costs.
  2. Value in Use: Calculate the present value of future cash flows expected from the asset.

• Use the following formula for calculating present value:

  Present Value = Future Cash Flow / (1 + Discount Rate)^n
  

Step 3: Recognize and Measure Impairment Loss

• If the carrying amount exceeds the recoverable amount, recognize an impairment loss.

• To measure the impairment loss:

  • Subtract the recoverable amount from the carrying amount.

  Impairment Loss = Carrying Amount - Recoverable Amount
  

• Record the impairment loss in the financial statements, reducing the asset's carrying amount.

Step 4: Disclosure Requirements

• Ensure you disclose relevant information regarding the impairment in the financial statements:
  • The nature of the asset.
  • The reasons for impairment.
  • The method used to determine the recoverable amount.
  • Any changes in estimates used for future cash flows.

Common Pitfalls to Avoid

• Failing to assess impairment indicators regularly can lead to inaccurate financial reporting.
• Overestimating future cash flows can result in insufficient impairment recognition.
• Not adhering to disclosure requirements may lead to non-compliance with accounting standards.

Real-World Applications

• Businesses should regularly review their assets for impairment, especially during economic downturns or shifts in market conditions.
• Companies can improve decision-making by integrating impairment assessments into their regular financial analysis processes.

Conclusion

Understanding PSAK 48 and the concept of impairment is critical for accurate financial reporting. By following the outlined steps—understanding impairment, calculating recoverable amounts, recognizing losses, and adhering to disclosure requirements—you can ensure compliance with accounting standards. Consider integrating regular impairment assessments into your financial policies to maintain accurate financial health and reporting.