IFA2 Assignment - Part 4-Recognition, Measurement and Disclosure.docx - ASSESSMENT OF ADOPTION BY THE COMPANIES ON RECOGNITION OF IMPAIRMENT OF ASSETS

IFA2 Assignment - Part 4-Recognition, Measurement and Disclosure.docx

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ASSESSMENT OF ADOPTION BY THE COMPANIES ON RECOGNITION OFIMPAIRMENT OF ASSETSHup Seng Industries Bhd (HSIB)have to compliance with the recognition of impairment as mentioned in previous part for all these assets:i.Property, Plant and Equipment (PPE)PPE of HSIB have fulfill the recognition of impairments as the carrying values of the PPE are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable which is stated in Note 2.9 (Property, plant and equipment and depreciation).ii.Investment Property (IP)MFRS 136 is applied in accounting for the impairment of IP that is measured at fair value butnot applied for IP that is measured at fair value. Since, HSIB measured the IP at cost, MFRS 136 can be applied. This company only explain about the IP under MFRS 140 and there is noexplanation about how impairment of IP at cost will be recognized in the Note 2.10 (Investment Property). However, under Note 2.11 (Impairment of Non-Financial Assets) stated how the asset are recognized. Since, the IP also categorized under non-financial assets,the company have compliance the recognition of impairment.9
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iii.Investment in subsidiariesInvestment in subsidiaries of HSIB have fulfill the recognition of impairments by carried out a review of the recoverable amount of its investment in In-Comix Food Industries Sdn.Bhd. (“ICM”) during the current financial year as there is an indication of financial performance ofsubsidiary has improved compared to previous financial year which is stated in Note 13 (Investment in Subsidiaries).Hwa Tai Industries Bhd (Hwa Tai)have to compliance with the recognition of impairment as mentioned in previous part for all these assets:i.Property, Plant and Equipment (PPE)Hwa Tai have compliance the recognition of impairment for PPE. This clearly stated in Note 3.5 and Note 3.9 that non-financial assets (i.e. PPE) are reviewed at the end of each reportingperiod to determine whether there is an indication of impairment.10
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ii.Investment in SubsidiariesAccording to Note 3.2 (Separate Financial Statements), investment in subsidiaries are measured at cost less any impairment losses. And for the policy for the recognition and measurement of impairment losses shall be applied on the same basis as could require for impairment of impairment of non-financial assets as disclosed in Note 3.9. Thus, Hwa Tai have compliance the recognition of impairment for investment in subsidiaries.iii.Investment in AssociatesInvestment in associates of Hwa Tai also have compliance the recognition of impairment likeinvestment in subsidiaries. This clearly stated in Note 3.2 that policy for the recognition and measurement of impairment losses shall be applied on the same basis as could require for 11
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