Question

1. In the case where an asset's carrying amount is less than its recoverable amount, which action is consistent with AASB 136?

A.leave asset at its carrying amount

B. recognise difference as increase is asset revaluation reserve

C.recognise difference as gain from reinstatement of asset

D.recognise difference as impairment loss

Answer 1

AASB 136 states:

If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss.

Thus impairment losses will be recognised when the carrying amount of an asset exceeds the recoverable amount of the asset.

1. In the case where an asset's carrying amount is less than its recoverable amount, following action is consistent with AASB 136:

D.recognise difference as impairment loss