BC121 In developing the Exposure Draft, the Board observed that requiring assets to be remeasured when they are impaired is a valuation concept rather than one of cost allocation. This concept, which some have termed ‘the recoverable cost concept’, focuses on the benefits to be derived from the asset in the future, rather than on the process by which the cost or other carrying amount of the asset should be allocated to particular accounting periods. Therefore, the purpose of an impairment test is to assess whether the carrying amount of an asset will be recovered through use or sale of the asset. Nevertheless, allocating the depreciable amount of an asset with a limited useful life on a systematic basis over that life provides some assurance against the asset’s carrying amount exceeding its recoverable amount. The Board acknowledged that non‑amortisation of an intangible asset increases the reliance that must be placed on impairment reviews of that asset to ensure that its carr
…Version date: 26 February 2020 - onwards
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