Impairment Flashcards
1
Q
what is impairment?
A
when the value of NCA falls to less than its carrying amount, and won’t recover. it needs to be written done to its new value (asset’s recoverable amount)
2
Q
how is recoverable amount calculated?
A
recoverable amount is HIGHER of fair value - costs to sell & value in use
3
Q
equation for impairment loss
A
carrying amount - recoverable amount
4
Q
double entry for impairment
A
Dr Impairment expense, Cr Asset
