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Diagram 1: LLTA recognition / administration process

Long-lived Tangible Assets and IFRS

Some of the accounting standards that address the

identification, recognition, accounting treatment and

valuation of LLTA are as follows:

IFRS 3 – Business Combinations

: The objective of IFRS 3

is to improve the relevance, reliability and comparability

of the information that a reporting entity provides in its

financial statements about a business combination and its


IFRS 13 – Fair Value Measurement

: IFRS 13 provides

guidelines for the valuation of assets and liabilities to

estimate/determine their fair value for financial reporting

purposes. The standard requires an entity to estimate an

“exit price” for the asset beingmeasured, which is the price

that would be received by the entity from the sale of the

asset on the measurement date.

IAS 16 - Property, Plant and Equipment:

This standard is

extremely relevant for LLTA fair value measurement and

recognition. To measure fair value after initial recognition,

entities may use either the cost model or the revaluation

model. Although IAS 16 does not specify how often fixed

assets should be revalued, generally speaking, fixed assets

should be revalued when there are market indicators that

provide evidence that the fair value of the relevant assets is

materially different from their carrying amounts.

Some of these indicators relate to:

Technological changes


Market circumstances

Environmental or governmental changes

Other requirements under IAS 16 that help entities

determine the depreciation of the carrying amounts of fixed

assets also help these entities better reflect the fair values

of these assets in their financial statements. These aspects

include (i) theseparationoffixedassets intotheir component

partswith different useful lives, (ii) the estimation of residual

values of fixed assets, and (iii) the review of useful lives of

fixed assets.

IAS 36 - Impairment of Assets

: IAS 36 requires entities to

identify whether the carrying amount of an asset or cash-

generating unit (CGU) exceeds its recoverable amount and

to record an impairment loss when this is the case. LLTA

should be tested for impairment when there are indicators

of impairment.

IAS 40 – Investment Property:

This standard addresses the

treatment applicable to investment property, which is land

or buildings held (by the owner or by the lessee as a right-of-

use asset) to earn rentals and/or for capital appreciation. IAS

40establishes that investment property shouldbemeasured

using either the cost model in accordance with IAS 16, or

the fair value model to measure the carrying amount of the

investment property based on the fair value of the asset.

IAS 29 – Financial Reporting in Hyperinflationary


IAS 29 addresses the recognition of the