Impairment of Assets Doubt help me

It gives treatment of impairment. Meaning you usually do this like Carrying amount of asset - depreciation. Here when a machine underperforms, its treated as impairment and thats taken out as

Carrying amount-depreciation-impairment

Dr. Impairment loss

Cr. Asset

This happens when the carrying amount of the asset is more than recoverable amount.

Recoverable amount is higher of its VIU or FVLCS

VIU is present value of future cashflows FVLCS is the amount that can be recovered when you sell it which also excludes sellng costs

• A company has a plant with a carrying amount of 100 crore rupees. Due to a decline in the demand for its products, the company estimates that the plant can generate cash flows of only 80 crore rupees over its remaining useful life. The net selling price of the plant is 70 crore rupees. According to AS 28, the recoverable amount of the plant is 80 crore rupees, which is lower than its carrying amount. Therefore, the company has to recognise an impairment loss of 20 crore rupees and reduce the carrying amount of the plant to 80 crore rupees.

I unnecessarily purchased ChatGPT subscripttion for 10k:) See it gave me the wrong output in the attachment. Its picking up wrong answers from wrong GAAP philosophers and interpreting it wrongly. Its taxguru this this time which it took as a reference

If VIU is 100k

FVLCS is 200K

Recoverable amount is FVLCS

VIU=VALUE in USE. 

CF/(1+r)^1+CF/(1+r)^2...........+CF/(wacc-growth) x 1/(1+r)^5

You discount the cash flows to present value including the last year value called as terminal value.

FVLCS= Fair value of asset less costs of disposal or sale. Fair value of the asset is determined by independent valuator. Fair value of asset - Selling costs

Use online search for formulas. I also copy from them once in a while. Its always better to learn formulas from your own books cause online is not trustworthy