Case 12-9 Rough Waters Ahead - IFRS 1. Cruise Ship belongs to the assets that apply to IAS 36 Impairment rule IAS 36-2 states the Impairment of Assets rule shall be applied in accounting for the impairment of all assets, other than: a) Inventories b) Assets arising from construction contracts c) Deferred tax assets d) Assets arising from employee benefits e) Financial assets that are within the scope of IFRS 19 f) Investment property that is measured at fair value g) Biological assets related to agricultural activity that are measured at fair value less costs of disposal h) Deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of IFRS 4 i) Non-current assets( or disposal groups) classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Smooth Sailing’s cruise ship does not fall into any exception of IAS 36, so IAS 36 should apply to impairment of cruise ship. Smooth sailing’s nonrecourse debt should not be included for the recoverability test according to this regulation. 2.

Cruise Ship should be impaired based IAS 36-12 IAS 36 provides guidance on which indications entities should consider in determining impairing an asset and Smooth Sailing’s case meets the *indications listed in IAS. IAS 36-12 In assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum the following indications. External source of information: b) Significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market economic or legal