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Unformatted text preview: evenues or physical units. Another issue is whether the unit-ofproduction method should be based on proved reserves, proved and probable reserves or another unit basis. The project team proposed that these issues be addressed in any future standard. Some respondents noted that they would like additional issues such as depreciation/depletion to be addressed if this project is added to the active agenda of the IASB. 2011 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 2011 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. 10 Impact of IFRS: Oil and Gas 3
E&E assets Impairment of non-financial assets Annual impairment testing for intangible assets that are not yet available for use is relaxed for E&E assets Development and production assets
Reporting date consideration of impairment indicators For non-current assets (other than goodwill and E&E assets) IAS 36 Impairment of Assets requires companies to assess at the end of each reporting period whether there are any indicators that an asset is impaired. If there is such an indication, then recoverable amount needs to be assessed. An impairment loss is recognised for any excess of carrying amount over recoverable amount. If recoverable amount cannot be determined for the individual asset, because the asset does not generate independent cash inflows separate from those of other assets, then the impairment loss is recognised and measured based on the cash-generating unit to which the asset belongs. units for impairment testing purposes. Allocation of assets to CGUs and impairment groups requires judgement and the interaction with indicators of impairment will require consideration. Indicators of impairment Some examples of indicators of impairment are outlined below. Market value has declined significantly or the company has operating...
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