Philippine Public Sector Accounting Standards 26

IMPAIRMENT OF CASH GENERATING ASSETS

Table of Contents
PAG
Number

BACKGROUND
INTRODUCTION TO THE IPSAS 26
PHILIPPINE APPLICATION GUIDANCE TO IPSAS
26
Scope

Effective Date

PPSAS 26 - Impairment of Cash Generating Assets

January 2014

Page 1

PHILIPPINE APPLICATION GUIDANCE TO IPSAS 26

Impairment of Cash Generating Assets

Background
This Philippine Public Sector Accounting Standard (PPSAS) 26 consists
of International Public Sector Accounting Standard (IPSAS) 26,
Impairment of Cash Generating Assets, and the Philippine Application
Guidance (PAG) prepared to suit the Philippine public sector situation.
The IPSAS 26 was issued in February 2008 by the International Public
Sector Accounting Standards Board (IPSASB) of the International
Federation of Accountants (IFAC). This includes amendments resulting
from IPSASs issued up to January 15, 2012.
The PAG (in italics) provides supplementary guidance on the proper
implementation of IPSAS 26.
Introduction to the IPSAS 26
IPSAS 26 provides that cash-generating assets are assets held with the
primary objective of generating a commercial return. An asset
generates a commercial return when it is deployed in a manner
consistent with that adopted by a profit-oriented entity. Holding an
asset to generate a commercial return indicates that an entity
intends to (a) generate positive cash inflows from the asset (or from
the cash-generating unit of which the asset is a part), and (b) earn a
commercial return that reflects the risk involved in holding the asset.
This Standard sets out the procedures that an entity shall apply to
determine whether a cash-generating asset is impaired, and to ensure
that impairment losses are recognized. It also specifies when an entity
shall reverse an impairment loss, and prescribes disclosures.
Philippine Application Guidance to IPSAS 26
Scope
PAG1.Paragraph 3 deals with the applicability of this Standard to all
public sector entities other than Government Business
Enterprises (GBEs).
GBE is an entity that has all the following characteristics: (a) Is
an entity with the power to contract in its own name; (b) Has
been assigned the financial and operational authority to carry on
PPSAS 26 - Impairment of Cash Generating Assets
January 2014

Page 2

a business; (c) Sells goods and services, in the normal course of

its business, to other entities at a profit or full cost recovery; (d)
Is not reliant on continuing government funding to be a going
concern (other than purchases of outputs at arms length); and
(e) Is controlled by a public sector entity.
This standard shall be applied to all National Government
Agencies (NGAs), Local Government Units (LGUs) and
Government-Owned and/or Controlled Corporations (GOCCs) not
considered as GBEs.
Effective Date
PAG2.This PPSAS shall apply for annual financial statements covering
periods beginning January 1, 2014.

PPSAS 26 - Impairment of Cash Generating Assets

January 2014

Page 3