For PPE and intangible assets with finite lives: For IFRS, the recoverable amount of an asset is defined as the higher of its (i) fair value minus costs to sell or (ii) its value in use. Under GAAP, recoverability is separate from measuring the impairment loss. An asset carrying amount is considered not recoverable when it exceeds the undiscounted expected future CF. Impairment loss equals asset’s fair value minus carrying amount (intangible assets with indefinite lives are tested annually for impairment). IFRS permits reversals of impairment losses, where GAAP prohibits it.
Impairments of long-lived assets held for sale are tested for impairment. If the carrying amount at the time of the reclassification exceeds the fair value less selling costs, the impairment is recognized and the asset held for sale ceases to be depreciated or amortized.
A company derecognizes an asset when the asset is disposed or is not expected to provide future benefits. Gain or loss on the sale of a long-lived asset is sale minus the carrying amount of the asset (at the time of the sale). The gain (loss) is disclosed on the income statement as a component of “other gains or losses” or if material, on a separate line.
Long-lived assets disposed of other than a sale are classified as held for use until disposal. The following are the different scenarios: (i) When the asset is retired, the accounting is similar to sale, but it does not record cash proceeds; (ii) When an asset is exchanged, the carrying amount of the asset is given up, a fair value for the asset acquired is added, and the reporting difference is the carrying amount – fair value gain (loss); (iii) when a spin off occurs, all the assets proportionate to the entity is spun off with it.
Under IFRS, investment property is property that is owned for the purpose of earning rentals or capital appreciation. Companies are allowed to value investment properties either through cost or fair value models (similar to revaluation with the difference being that all changes affect net income). GAAP has no specific definition of investment property and this type of property uses the historical cost model.