Double counted losses

At the end of 2013, an entity with a single CGU is carrying out an impairment review. The discounted forecast cash flows for years 2015 and onwards would be just enough to support the carrying value of the entity’s assets. However, 2014 is forecast to produce a loss and net cash outflow. The discounted value of this amount is accordingly written off the carrying value of the fixed assets in 2013 as an impairment loss. It is then suffered again in 2014 (at a slightly higher amount being now undiscounted) as the actual loss. Once that loss is past, the future cash flows are sufficient to support the original unimpaired value of the fixed assets. Nevertheless, the assets cannot be written back up through the profit and loss account to counter the double counting effect as the increase in value does not derive from a change in economic conditions or in the expected use of an asset.