Impairment loss

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Follow Query Ask a Query

CA Akhilesh Srivastava

CA Akhilesh Srivastava (Querist)
Follow

23 November 2008 I m not able to find out the difference between Impairment and Revaluation.

Clear it for me.

Deepak Agrawal

Deepak Agrawal (Expert)
Follow

24 November 2008 Impairment is downward valuation.

Revaluation may be upward or downward valuation

Ravikumar.G

Ravikumar.G (Expert)
Follow

24 November 2008 Fixed assets are held by an enterprise for the purpose of producing goods or rendering services, as opposed to being held for resale in the normal course of business. For example, machines, buildings, patents or licences can be fixed assets of a business.
The purpose of a revaluation is to bring into the books the fair market value of fixed assets. This may be helpful in order to decide whether to invest in another business. If a company wants to sell one of its assets, it is revalued in preparation for sales negotiations.

Ravikumar.G

Ravikumar.G (Expert)
Follow

24 November 2008 An impaired asset is a condition in which an asset's market value falls below its carrying amount and is not expected to recover. This means that an asset's market valuation is less than the book value of the asset and the future cash flows to be generated from the asset are less than the net difference of the market value and the book value of the asset. At this point it becomes necessary to write down the value of the asset in the books by debiting a loss account (which will show up as an expense in the income statement) and crediting the respective asset account. This is a common occurrence for goodwill where a company will purchase another company for more than the value of the net assets of the target company. Under US GAAP, goodwill is tested annually for impairment.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!