Impairment loss

Screen management

This function is composed of:

• A header that is used to specify the processing options: simulation, printing of a detailed log file.
  
• A tab that is used to enter the impairment loss/reversal or impairment loss/reversal cancellation process setups.

Management of the window

The management is the same for this window as for all the mass processing processings that can be applied to assets.

Processing setup

1/ Impairment loss/reversal process:

First, it is necessary to set up the processing. This setup consists in:

- Specifying the processing options. By default, the process is performed in Simulationmode. It generates a Detailedlog file presenting the values of the different parameters applied at the time of the execution and displaying, for each asset updated, the Balance sheet value and Market value, the Impairment loss, Impairment loss reversal and Balance amounts and the reversal limit for the impairment loss as well as the new Net value after impairment loss.

- Possibly entering the company in order to filter the CGUs and thus only display in the list accessed from the CGU field those that own at least one asset belonging to the selected company.

- Entering the setups linked to the impairment loss/reversal processing: reference of the the CGUbeing the subject of the impairment loss/reversal, the Depreciation planconcerned, the Reason for the impairment loss/reversal as well as the Market valueand/or the Usage value of the CGU.

2/ Impairment loss/reversal cancellation processing:

It is only necessary to activate the Cancel impairment loss flag. It becomes available once a impairment loss/reversal process has taken place for the selected CGU, in the current period for the specified depreciation plan.

Process launch

Once the setup is done, it is possible to:

• Either to directly confirm the entry of the parameters by clicking on [OK]. The deprecation/reversal calculation is carried out directly in the selected asset(s).
  
• Or to pass by an intermediate stage - control on the parameters entered and the values calculated - by clicking on the button [Control].

A window displays in the form of a table the list of assets attached to the selected CGU. For each of the assets, the following information is displayed:

- Company in which the asset is referenced
- Asset reference and description
- Ex-tax receipt value (CoA or IFRS)
- Net value before impairment loss/reversal
- Impairment
- Impairment loss reversal
- Net value before impairment loss/reversal
- Reversal limit
- Market value
- Effective start date.

The impairment loss or impairment loss reversal amounts calculated in this way can be modified by the user.

Any modification must be confirmed by using the button [Save] list. To cancel the modifications under way on the asset, click on [Cancel].
Once the manual adjustments are complete, click on [End] button to close the control window; the parameter entry window is displayed again, making it possible to either confirm the mass update by clicking [OK], or to abort the update by clicking the button [End].

Header

Options

• Simulation:
  This box, ticked by default, is used to carry out an impairment loss simulation on the selected assets. The modification of the assets is not recorded in the database.
  The impact of the processing on the assets can be viewed in the log file displayed at processing completion.
  
• Detailed log file:
  A process log file is systematically displayed at the end of the processing. This log shows the processing options used, any selection criteria and the impairment loss setup values. It further shows for each of the companies involved in the process: the number of assets processed, the number of assets updated and the number of assets not processed as a result of an error.
  
  When this box is selected, the log file is displayed in a detailed report presenting, in addition to the information listed above, the list of assets successfully processed, grouped by company. The following information is given for each of the assets : the Balance sheet value, the Market value, the Impairment loss amount, the Impairment loss reversal amount, the Impairment loss balance, the Impairment loss reversallimit as well as the new Net value.

Note: the viewing and printing of the log files is possible at any time via the Print log file print request of the ATRACE report code, obtained from the Supervisor function in the Print/Group print menu.

Company selection – Site selection

These tables display both the list of managed companies for which the user is authorized and the list of sites corresponding to these companies where the user is authorized.

 When the company parameterACCPERCTL - Control of accounting periods(chapter AAS, group CPT) has Yes for value, the company is not displayed in the list as soon as at least of one its context is not synchronized with the accounting period/fiscal breakdown.In this case, it is necessary to launch the processing ofContexts synchronization.
The desynchronization status of a context can be viewed on theDetailed status of contexts,Calculation tab (the value of the Modification type field is set to:CNX and the value of the field Parameter modified isDESYNC).

Note:
An impairment loss is necessarily carried out on all the assets making up a CGU. These assets can be referenced in different companies, it is therefore not possible to choose a company with the goal of only selecting the assets of this company.
The selection is only used to filter the CGUs in order to only display those having at least one asset belonging to the chosen company in the list accessible from the CGU field.

Tab Setup definition

1 - Impairment loss (reversal)

This tab is used to:

• Enter the reference of the CGU to be impaired.
   
• Select the plan on which the impairment loss processing will be carried out. To be selected, the plan must fulfill the following conditions:
   
  - It must be a plan managed according to the IAS/IFRS or CRC2002-10 standards.
  - It cannot be the subsidy plan.
  - If the assets belong to different companies, the management currency for the context as well as the current period end date of the context must be identical across all of these companies.
  - A periodic calculation of the plan must necessarily have been performed for each company.
• Enter the following parameters:
  
  - Internal reason and/or external reason justifying the impairment loss or impairment loss reversal.
  
  - Market value and/or Usage value. These values will be used to determine the Recoverablevalue that corresponds to the largest of the two. The entry of at least one of the two values is therefore mandatory.
   
• Display the following information:
  
  - Effective date: this field is automatically loaded with the end date of the current fiscal year or with the end date of the current period when the fiscal year is sub-divided into periods.
  
  - Net bookvalue. This field is automatically loaded with the sum of the net book values of the assets in the CGU at the end of the current period before the application of the impairment loss or the impairment loss reversal.
  This field is not assigned upon impairment loss cancellation.
   
  -Impairment loss. This field is loaded automatically after determining the value to recover, based on the impairment loss amount of the period. This amount corresponds to the result of the following calculation:
  
  Sum of the Net Book Values of the assets in the CGU at period end – Recoverable value of the CGU
  … only if the sum of the net book values is greater than the recoverable value. In the opposite case, the impairment loss amount is equal to: 0.
  This field is not entered during the cancellation of an impairment loss.
   
  - Impairment loss reversal. This field is automatically loaded after the recoverable value has been determined. It contains, if it exists, the impairment loss reversal amount for the period. It can only be entered if an impairment loss has already been carried out in one of the previous periods.
  This amount corresponds to the result of the following calculation:
  Recoverable value of the CGU - Sum of the Net Book Values for the assets of the CGU at period end 
  … only if the recoverable value is greater than the sum of the net book values.
  Otherwise, the Impairment loss reversal amount is equal to: 0.
  This field is not entered during the cancellation of an impairment loss.
   
  - Impairment loss reversal balance. This field is entered only when the calculated impairment loss reversal amount cannot be distributed in its totality, on the assets attached to the CGU, taking into account the impairment loss reversal limits of the assets.
  This impairment loss reversal balance can be used as a revaluation for companies that have chosen this method: the revaluation is carried out either by individual processing or by the mass revaluation . processing.
  This field is not entered during the cancellation of an impairment loss.
  
  - Impairment loss limit. This field is only entered when an impairment loss has already been carried out in one of the previous periods. It is loaded with the sum of the impairment loss reversal limits for the assets in the CGU.
  This amount is used to determine the distribution of the impairment loss reversal on the assets of the CGU (see below the terms used to distribute the global impairment loss reversal amount determined at CGU level, on each of the assets,) as well as the impairment loss reversal balance.

Description of the impairment loss processing

An impairment loss processing carries out the following operations:

• Calculation of the impairment loss amount (and impairment loss reversal limit) or of the impairment loss reversal amount of the CGU, then distribution of the amount on each of the selected assets according to the terms detailed later, at the level of the Control button.
   
• Calculation of the new net value of the assets at the end of the period. If this new net value is smaller than the residual value, the amount of this net value will be added to the residual value at closure.
   
• Loading of the internal/external reason for impairment loss, at the level of each asset. This information is displayed in the Depreciation plan tabs.
   
• The impairment loss of an asset in non residual mode leads to a change in depreciation method that will automatically take the Equivalent residual method value. This change in method is used to process in a long-term fashion the impairment loss or impairment loss reversal, by depreciating the new net value over the residual depreciation duration.
   
• Generation of an Impairment loss event (FASIML )or impairment loss reversal brought about by the disappearance of or reduction in the value loss index for the asset:
  - The operating effective date recorded in the EVTDAT field and the accounting effective date recorded in the CPTDATINT field receive the End date of the current period.
  This event contains the information required for the production of accounting entries related to impairment losses and impairment loss reversals.
  (The user can view the events in the Event journal window that can be accessed from the Other info tab of the Assets management function.)
  
  Notes:
  - In case of an impairment loss reversal occurring during the issue of an asset with an impairment loss balance on issue date, the FASIML event is generated on asset disposal. 
  - When the impairment loss reversal is linked to an impairment loss on a plan managed in compliance with the CRC2002-10 standard, and transferred to exceptional depreciation (see below), no reversal event is generated. The values required for the posting of the impairment loss in the impairment loss account, are recorded in the DEPREC charge table. 

Impairment loss on a plan managed in compliance with the CRC2002-10 standard (generally speaking on the chart of accounts of a French company).

A impairment loss occurring on a plan managed in compliance with the CRC2002-10 standard is automatically accompanied by a impairment loss reversal calculated on the last period of the current FY. The amount of the impairment loss reversal corresponds to the difference between the amount of the theoretical FY expense (calculated without taking the impairment loss into account) and the amount of the actual FY expense.
This impairment loss reversal is automatically transferred to exceptional depreciation in the last period of the FY or in the issue period if an asset issue is recorded in a previous period.
The reversal and its transfer to exceptional charge are neutral regarding the net value:
- the impairment loss reversal increases the net value
- the exceptional depreciation charge reduces this net value by the same amount.
 
Notes:

• An impairment loss on the chart of accounts does not generate any Book vs. Tax depreciation. This depreciation is actually determined taking into account the theoretical accounting depreciation of the FY (and not the actual depreciation), i.e. taking into account all the depreciation expenses: the "standard" expense to which the exceptional expense, caused by a impairment loss reversal or not (see examples 2 and 3 below), is added.
• When an asset has 2 impairment loss reversals on the same period, the chronology is as follows:
  1. Calculation of the expenses: the result is the Impairment loss reversal to transfer as exceptional expense.
  2. * Either saving of an impairment loss reversal after disappearance of or decrease in the value loss index: this Impairment loss reversal will be added to the Reversal calculated in step 1.
  2. Or impairment loss reversal because of the asset issue: this Impairment loss reversal will be added to the Reversal calculated in 1.
   
  * This reversal is exclusive:
  - if the asset is issued, the impairment loss or impairment loss reversal is prohibited,
  - if an asset has been subjected to an impairment loss or an impairment loss reversal and is issued in the same period, the impairment loss (or impairment loss reversal) is canceled. The events used to reverse their posting are generated.