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IMPAIRMENT OF ASSET

TOUFIK (ACCA STUDENT) (190 Points)

12 October 2008

Pleaase let me know about what is impairment & accounting tratment of accounting

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NANDURI RAVI SURYA NARAYANA MU (ACCOUNTANT) (194 Points)
Replied 12 October 2008

Originally posted by :TOUFIK

As per your company procedures and policies, your management will be decided to reassess the valuation of fixed assets for a certain period. This must be done by certified valuer. Accourding to that valurer decrease the any assest is called impairment of assets. According to that valuer value amount you must pass a JV in your books of accounts.

Loss on Valuation of Assets a/c Dr

To Fixed Assets

This is my knowledge only.

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If Recoverable amount of assets (ie. saleable value or present value of cash flow that concern asset can generate over a period of time) is less than carrying amount(ie. cost or Revalued amount) in the Balance sheet, then the difference is called impairment of Assets. So, we have to provide provision for impairment(ie. for the difference). Concern, provision has to debited to P&L a/c and then it has to reduced in the Concern asset.