NIF Bulletin C-15 | Deterioration in the Value of Long-Lived Assets and Their Disposal

Bulletin C 15 of the NIF

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Importance of NIF

The Financial Reporting Standards (NIF) play a crucial role in the accounting field by establishing principles, guidelines and rules for the preparation and presentation of financial information in Mexico. Their importance lies in several key aspects:


1. Uniformity and Consistency: FRS provide a common regulatory framework that entities must follow when preparing their financial statements. This guarantees uniformity and consistency in the presentation of accounting information, facilitating the comparison of performance between different companies and periods.


2. Quality and transparency: By adhering to NIF, companies are obliged to provide high-quality and transparent financial information, this strengthens the confidence of investors, analysts, regulatory authorities and other stakeholders, who rely on the integrity of the information to make informed decisions.


3. Alignment with International Standards: The NIFs are aligned with the International Financial Reporting Standards (IFRS/IFRS), which facilitates the comparison of financial information internationally, which is crucial in a globalized economic environment, where companies may have investors and operations in different parts of the world. .


4. Facilitation of Decision Making: FRS-based financial reporting provides a solid basis for strategic and operational decision-making, with both internal managers and external investors using these reports to assess an entity's financial performance, position and future prospects.


5. Legal and Tax Compliance: Compliance with NIF is essential to comply with legal and tax requirements in Mexico, financial reports prepared in accordance with these standards are essential for the presentation of tax returns and compliance with local accounting regulations.


NIFs not only establish accounting standards, but also promote consistency, transparency and reliability in the presentation of financial information and their adoption and proper application are essential for the proper functioning and credibility of the financial system in Mexico.

NIF in Mexico

In Mexico they are issued by the Mexican Financial Reporting Standards Council (CINIF), these standards have the purpose of regulating the preparation and presentation of financial information in the country. 


Here are some key points about NIFs in Mexico:


Broadcast and Update: The CINIF is the entity responsible for issuing and updating NIFs. This body works in collaboration with various institutions, including tax and financial authorities, to ensure the relevance and applicability of the standards in the Mexican economic environment.


Compliance with International Standards: The NIFs are aligned with the International Financial Reporting Standards (IFRS/IFRS), seeking convergence with international accounting standards, which facilitates the comparison of financial reports at a global level and strengthens the competitiveness of Mexican companies in international markets.


Application by Entities: NIFs are mandatory for all entities that issue financial statements in Mexico, whether they are listed on the stock exchange or not. This includes private companies, public companies, government entities and non-profit organizations.


NIF hierarchy: The regulatory framework has different levels: the NIF, the Interpretations of the NIF (INIF), the Auditing Standards (NA) and the Interpretations of the Auditing Standards (INAF). This set of standards seeks to provide complete and coherent guidance. for the preparation and audit of financial information.


Various Accounting Aspects: NIFs cover a wide range of topics, including the recognition of income, the valuation of assets and liabilities, the presentation of financial statements, among others, they also deal with specific topics, such as leases, financial instruments, and the accounting treatment of companies in the process of liquidation.


Emphasis on Transparency and Quality: NIFs seek to guarantee the transparency and quality of financial information, establishing principles that help users understand the financial situation of an entity and make informed decisions.


Training and Update: The effective application of NIF requires that accounting professionals are trained and updated on regulatory changes, the CINIF and other institutions offer training programs to ensure that accountants are aware of the latest modifications and interpretations.


NIF in Mexico They are fundamental for the standardization and improvement of the quality of financial information, providing a solid accounting framework aligned with international standards, their application contributes to the transparency, reliability and comparability of accounting information in the country.


Bulletin C-15, Impairment in Value of Long-Lived Assets and Their Disposition

Objective of this newsletter: Provide 


  • Guidelines for recognizing circumstances that demonstrate potential impairment of long-lived assets, whether tangible or intangible.

  • Regulations for the determination, accounting, presentation and disclosure of impairment losses, as well as for the process of reversal of said losses.

  • Regulations on the way in which the discontinuation of operations must be presented and disclosed.


The provisions established in the Bulletin C 15 They apply to all long-lived assets, covering both tangible and intangible assets, including goodwill. However, they are not relevant to the following categories: 


  1. Financial instruments


  1. accounts receivable


  1. inventories


  1. Deferred tax assets


  1. Built or manufactured assets that are regulated by Bulletin D 7



State that occurs when the net book value of long-lived assets, whether in use or ready for disposal, exceeds the future economic benefits expected to be obtained from them, for the purposes of this Bulletin, the Future economic benefits are evaluated in relation to the recovery value of the assets, the recovery value of an asset or a cash-generating unit is determined as the higher of its estimated use value and its projected net selling price. .

What are the signs of deterioration?

  1. Significant decrease in the market value of an asset.


  1. Significant reduction in the use of installed capacity.


  1. Loss of market for the products or services that are the object of the business.


  1. Technological changes (obsolescence)


  1. Physical damages


  1. Suspension or cancellation of a franchise, license, etc.


  1. Significant changes in the destination or use of an asset


use value

It refers to the present value of cash flows expected in the future, using an appropriate discount rate. 


Future cash flows are determined as the best estimate of future net cash receipts, excluding financing expenses and without applying discount, associated with the use of a cash-generating unit and considering its realizable value at the end of its life. useful life.

net sale price

Verifiable amount that would result from the sale of a long-lived asset in a free competition transaction between interested and willing parties, discounting its cost associated with the disposal, in the situation of long-lived assets, it is necessary that there be an observed market.

Long-lived assets in use

In the event that any signs of depreciation in the value of an asset are identified, it is imperative to evaluate the possible loss, unless there is conclusive evidence that strongly indicates that such signs are temporary.


Whether the net selling price or value in use exceeds the net book value of the cash-generating unit, impairment will not be considered, and the other value will not need to be calculated.


Determination of use value


The optimal estimate of future cash flows is made by calculating their value in the currency of purchasing power in force on the date of the evaluation, future cash flows represent the disparity between potential income and operating costs and expenses directly linked to the income generated by the specific unit, excluding depreciation and amortization. 


In the case of assets that are still in the process of construction or installation, the disbursements necessary for their completion must be considered, provided they have made sufficient progress.


Estimates of future cash flows must cover a period of time that coincides with the remaining useful life of the main asset that generates these flows, and if they do not exist, they will be calculated based on the weighted remaining useful life of the main assets. .


  1. Projections must be based on logical, verifiable and supported assumptions, taking into account the experience, skill and capacity of the entity to forecast cash flows, greater importance is given to external evidence.

  2. After five years, an estimate should be made using scenarios that do not include growth rates, unless there is conclusive evidence to the contrary.

  3. Do not consider cost savings related to staff reduction and restructuring, unless the entity has made a commitment in this regard, or unless they come from future investments.

  4. Include the impact of unavoidable commitments, such as restructuring, asset maintenance and asset additions necessary to preserve the productive capacity of the cash-generating unit.


Recording of impairment loss:


Show it as a specific category within continuing operations, even if the loss can be attributed to prior discounting, depreciation or amortization, it must be distributed proportionally among the long-lived assets of the cash-generating unit, excluding those assets whose price net of sale is equal to or greater than its net book value, if applicable, is initially applied to corporate assets.


Reversal of an impairment loss

When the direction of the recovery value shows improvements and exceeds the new net book value, the reversal of the impairment loss must be carried out, as long as it is fully supported and meets the characteristics of permanence and verifiability.


It can happen when:


  • Positive consequences derived from significant alterations in the market, economic, technological, regulatory, legal, environmental factors, among others.

  • Significant decrease in market interest rates.

  • That markets arise that are observable and verifiable, which makes it possible to evaluate net sales prices.

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