Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HKAS 36.126(a) & 130
HK Listco Ltd
Financial statements for the year ended 31 December 2023
Impairment loss 155
In June 2023, a number of machines in the property development division 156 were physically damaged.
The group assessed the recoverable amounts of those machines and as a result the carrying amount of
the machines was written down to their recoverable amount of $6,230,000157. An impairment loss of
$1,200,000 was recognised in "Cost of sales" 158. The estimates of recoverable amount were based on
the machines' fair values less costs of disposal, using market comparison approach by reference to
recent sales price of similar assets within the same industry, adjusted for differences such as
remaining useful lives 159. The fair value on which the recoverable amount is based on is categorised as
level 3 measurement. The equipment was disposed of before the end of the year at approximately its
carrying amount at that time. 160
[Paragraphs 126 to 132 of HKAS 36 contain detailed disclosure requirements that apply whenever an
entity recognises an impairment loss/a reversal of an impairment loss. If an impairment loss has been
recognised or reversed, care should be taken to comply with these requirements, including disclosing
key assumptions. It may be helpful to the reader to include sensitivity analysis for any particularly
judgemental assumptions which may be subject to change in an uncertain future.]181
HKFRS 16.96
HKAS 36.130
(c)(ii)
HKAS 36.130(e)
HKAS 36.126(a).
HKFRS 13.7(c)
HKAS 36.130(f)
HKAS 34.26
155 If the lessor recognises impairment loss on assets subject to operating leases, it needs to provide the disclosure required by HKAS 36 for
assets subject to operating lease separately from owned assets held and used by the entity.
156 If an entity reports segment information in accordance with HKFRS 8, it should disclose for an individual asset the reportable segment to
which the asset belongs.
157 For an individual asset (including goodwill) or a cash-generating unit for which an impairment loss has been recognised or reversed during
the period, the entity is required to disclose the recoverable amount of the asset or CGU and whether the recoverable amount of the
asset or CGU is its fair value less costs of disposal or its value in use. If the recoverable amount is fair value less costs of disposal,
additional disclosures will be required. See footnote 159 below for details of those additional disclosures.
158 In this illustration, HK Listco presents its expenses by function (see footnote 49) and has therefore allocated the impairment loss of non-
financial assets to the appropriate function. In our view, only expenses that cannot be allocated to a specific function are classified as
"other operating expenses" (e.g. impairment of goodwill). This is the case even if the asset to which the impairment relates is
subsequently disposed of before the end of the same year - in this illustration, HK Listco has kept the impairment loss previously
recognised in the published interim financial statements in the same line item (i.e. "Cost of sales") even though the asset to which the
impairment relates was subsequently disposed of, and the gain or loss on disposal is included in a different line item (i.e. "Other income"
in note 4) in the annual financial statements.
159 As stated in paragraph 7(c) of HKFRS 13, an asset whose recoverable amount is fair value less costs of disposal in accordance with HKAS
36 is outside the scope of HKFRS 13's disclosure requirements. Instead, entities need to provide the following disclosures required by
paragraph 130 of HKAS 36 if an impairment loss has been recognised or reversed during the period in respect of the asset whose
recoverable amount is fair value less costs of disposal:
⚫ the level of the 3-level fair value hierarchy (as defined in HKFRS 13) within which the fair value measurement is categorised;
for Level 2 and Level 3 fair value measurements:
•
a description of the valuation technique(s) used to measure fair value less costs of disposal;
any change in valuation technique used and the reason(s) for making the change;
key assumptions used in determining the fair value less costs of disposal; and
discount rate used in the measurement if a present value technique is used for measuring fair value less costs of disposal.
160 If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year,
paragraph 26 of HKAS 34 requires the nature and amount of the change in estimate to be disclosed in a note to the annual financial
statements unless a separate interim financial report is published for that final period. For entities listed on the Stock Exchange of Hong
Kong, as typically an interim financial report is only published in respect of the first six months of the period, this disclosure requirement
in paragraph 26 of HKAS 34 would apply to the annual financial statements whenever there is a significant change in the second half of
the year to an estimate reported in the first half of the year.
103
© 2023 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited ("KPMG International"),
a private English company limited by guarantee. All rights reserved.View entire presentation