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Chapter 9: Long-term Assets I: Property, plants and equipment 1. Explain the impairment of Assets and...

Chapter 9: Long-term Assets I: Property, plants and equipment

1. Explain the impairment of Assets and how it is accounted.

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Ans: Asset is considered tto be impaired when the higher of " present value of future cash flow or carrying value of asset " is lower than the fair value of the asset in the market. In such a situation asset is considered to be impaired.

Amount of impairment loss should be debited to profit and loss account and credit from the asset value to bring it down to its fair value. And the details of impairment of asset and condition lead to recognition of the same should be properly disclosed in the notes to account.

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