Accounting standerd

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Rahul kumar

Rahul kumar (Querist)

01 May 2012 What is "AS".What is in the"Accounting stanerd 28"

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

01 May 2012 AS- short form for "Accounting Standard"

AS-28 deals with the Impairment of assets

mahak katyal

mahak katyal (Expert)

01 May 2012 AS are the standards according to which accounts of an organization should be prepared.
AS 28 deals with Impairment of assets
It is not applicable on:
(because these are covered by other ASs)
Inventories
Investments
DTA
Investent in finance lease
Investent in retirement benefits
construction contracts

Other than the above mentioned areas,if:
Carrying Amount of assets < Recoverable Amount,the assets is said to be impaired and should be accounted for.

Entry : Impairment Loss a/c
to Assets a/c

P&l A/c
to Impairment Loss a/c

where, Carrying Amount = Net Book Value as per Balance sheet
Recoverable Amount= higher of Net Selling price(Selling Price-Expected cost to dispose off the asset) or value in use( Expected Cash Inflow * P.V Factor)

How to Detect if there is impairment :
there can be internal indication like: asset is no more useful to the entity, or is damaged due to any reason

there can be external indication like : market price has declined more than expected or more than the pricing policy, interest rate has increased etc

Incase we cant calculate the Net selling price or value in use for a group of inter-related assets,we can find it by - Aggregation process or segregation process

Imapirment of Goodwill can be found out by Bottom up Approach or Top down approach

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