Difference Between AS 28 and Ind AS 36

Accounting Standard 28: AS 28 came into effect in respect of accounting period commenced on or after 1-4-2004 and is mandatory in nature from that date for the following: 

  • (i) Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidenced by the board of directors’ resolution in this regard.
  • (ii) All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs 50 crores.

In respect of all other enterprises, the Accounting Standard came into effect in respect of accounting periods commenced on or after 1-4-2005 and is mandatory in nature from that date.

This standard prescribes the procedures to be applied to ensure that the assets of an enterprise are carried at an amount not exceeding their recoverable amount (amount to be recovered through use or sale of the asset). The standard also lays down principles for reversal of impairment losses and prescribes certain disclosures in respect of impaired assets. An enterprise is required to assess at each balance sheet date whether there is an indication that an enterprise may be impaired. If such an indication exists, the enterprise is required to estimate the recoverable amount and the impairment loss, if any, should be recognised in the profit and loss account.

Ind AS 36 Impairment of Assets

The objective of Ind AS 36 is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and the Standard requires the entity to recognise an impairment loss. The Standard also specifies when an entity should reverse an impairment loss and prescribes disclosures.

Difference Between AS 28 and Ind AS 36

AS 28 IND AS 36
­­­­Contains less disclosures as compared to Ind As 36 Ind AS 36 contains extra disclosures as compared to AS 28.
Under AS 28, it is possible to reverse the impairment loss recognised for goowill, in certain circumstances. Reversal of impairment loss on goodwill is not permitted under IND AS 36.
Does not specifically exclude biological assets from its scope. Specifically excludes biological assets related to Agricultural activity.
AS 28 requires measurement of recoverable amounts, only when there are indications that an asset may be impaired.

Ind AS 36 too carries this principle, but for the following assets, recoverable amounts shall be measured annually, whether or not there has been any indication of impairment:

  • Goodwill
  • Intangible asset not yet available for use
  • Intangible asset with indefinite useful life.

Compared to AS 28, Ind AS 36 provides additional guidance on:

  • Estimation of value in use
  • Use of present value techniques for measuring asset’s value in use
  • Assessment of reasonableness of assumptions made by management while estimating the future cash flows.
The existing AS 28 does not apply to the such assets. Investments in subsidiaries, associates or joint ventures, which are accounted for, either at cost or at equity as per the respective Ind AS are subject to impairment under Ind AS 36.
AS-28 includes a separate section on impairment of assets under Discontinuing Operations. IND AS 36 is not applicable to impairment of assets under discontinuing operations as it is covered by Ind AS 5 - Non-current Assets Held for Sale and Discontinued Operations.
AS 28 employs “bottom up” and “top down” tests when a CGU is identified to be impaired and a related goodwill exists in books. There is no bottom-up or top-down approach for allocation of goodwill, in Ind AS 36.