Explanatory Statement
Accounting Standard AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
June 2013
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2013-3
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets makes amendments to Australian Accounting Standard AASB 136 Impairment of Assets.
These amendments arise from the issuance of Exposure Draft ED/2013/1 Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) by the International Accounting Standards Board in May 2013.
Main Features of AASB 2013-3
AASB 2013-3 amends the disclosure requirements in AASB 136. The amendments include the requirement to disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal. In addition, a further requirement has been included to disclose the discount rates that have been used in the current and previous measurements if the recoverable amount of impaired assets based on fair value less costs of disposal was measured using a present value technique. The intention of this amendment is to harmonise the disclosure requirements for fair value less costs of disposal and value in use when present value techniques are used to measure the recoverable amount of impaired assets.
Application Date
AASB 2013-3 applies to annual reporting periods beginning on or after 1 January 2014. Early application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 January 2014, provided that AASB 13 Fair Value Measurement is also applied to the same period.
Consultation Prior to Issuing this Standard
The AASB issued Exposure Draft ED 235 Recoverable Amount Disclosures for Non-Financial Assets (Proposed Amendments to AASB 136) in January 2013 for a 38 day public comment period. ED 235 reproduced the proposals in the IASB’s Exposure Draft ED/2013/1 Recoverable Amount Disclosures for Non-Financial Assets (Proposed Amendments to IAS 36) (January 2013).
The AASB received four submissions from Australian constituents on ED 235. Most were generally supportive of the proposals. The AASB considered the comments it received in making its submission to the IASB on ED/2013/1 and in finalising AASB 2013-3.
A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2013-3 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
Overview of the Accounting Standard
AASB 2013-3 makes amendments to AASB 136 Impairment of Assets. These amendments arise from the issuance of Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) by the International Accounting Standards Board in May 2013.
Human Rights Implications
This Standard is issued by the AASB in furtherance of the objective of facilitating the Australian economy. It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.
Conclusion
This Standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
Accounting Standard AASB 2013-3Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets was enacted in 2013. This accounting standard, issued by the Australian Accounting Standards Board (AASB), was developed in response to the International Accounting Standards Board’s Exposure Draft ED/2013/1 Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) issued in May 2013. The objective of AASB 2013-3 is to amend the disclosure requirements in AASB 136, the Australian Accounting Standard for the impairment of assets. These amendments aim to align the disclosure requirements for the recoverable amount of non-financial assets with international standards, particularly in relation to fair value measurement and the use of present value techniques. The standard applies to annual reporting periods beginning on or after 1 January 2014, with early adoption permitted under certain conditions.
Scope and Application
AASB 2013-3, Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets, applies to entities in Australia that prepare financial reports in accordance with Australian Accounting Standards. The standard amends the disclosure requirements for the recoverable amount of non-financial assets, particularly focusing on additional information about fair value measurement when the recoverable amount is based on fair value less costs of disposal. This amendment is intended to harmonise the disclosure requirements for fair value less costs of disposal and value in use when present value techniques are used to measure the recoverable amount of impaired assets. The amendments are effective for annual reporting periods beginning on or after 1 January 2014, with early application permitted for periods beginning on or after 1 January 2005, provided AASB 13 Fair Value Measurement is also applied. This standard extends to all entities subject to AASB standards, thereby impacting a broad range of industries that must comply with Australian accounting standards.
Key Provisions
AASB 2013-3, Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets, primarily amends the disclosure requirements under AASB 136 Impairment of Assets. The key provisions include a mandate for entities to disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal (Section 3). Moreover, entities are required to disclose the discount rates used in the current and previous measurements if the recoverable amount is determined using a present value technique (Section 4). These amendments aim to align the disclosure requirements for fair value less costs of disposal with those for value in use when present value techniques are employed to measure the recoverable amount of impaired assets.
Entities governed by AASB 2013-3 must ensure that their financial statements provide the additional disclosures as required by Sections 3 and 4. This includes detailed information about the fair value measurement of impaired assets and the discount rates used in these measurements. The requirement to disclose this information is intended to enhance the transparency and comparability of financial statements, thereby aiding stakeholders in making informed decisions.
While AASB 2013-3 does not explicitly outline specific offences or penalties for non-compliance, failure to adhere to the amended disclosure requirements could potentially lead to consequences under broader financial reporting regulations. For instance, under the Corporations Act 2001, directors and officers may be subject to penalties for providing misleading or deceptive information in financial reports. The maximum penalties can include fines and imprisonment, reflecting the seriousness of non-compliance with financial reporting standards. Additionally, entities that fail to comply with the disclosure requirements may face reputational damage, loss of investor confidence, and potential legal actions from affected parties.