Impairment of assets

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Query Ask a Query

shivam

shivam (Querist)

15 December 2008 what is "impairment of assets" according to AS 28

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)

15 December 2008 It is a process of re instatement of book value as a carrying amount.book value being different from the carrying amount.

Ravikumar.G

Ravikumar.G (Expert)

15 December 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