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Corporate Accounting and Reporting: Impairment Loss of Cash Generating Units

   

Added on  2019-11-08

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RUNNING HEAD: CORPORATE ACCOUNTING AND REPORTINGCORPORATE ACCOUNTING AND REPORTING
Corporate Accounting and Reporting: Impairment Loss of Cash Generating Units_1

CORPORATE ACCOUNTING AND REPORTING1ContentsIMPAIRMENT LOSS OF CASH GENERATING UNITS EXCLUDING GOODWILL..........................................2REFERENCES..........................................................................................................................................6
Corporate Accounting and Reporting: Impairment Loss of Cash Generating Units_2

CORPORATE ACCOUNTING AND REPORTING2IMPAIRMENT LOSS OF CASH GENERATING UNITS EXCLUDING GOODWILLAccounting of Impairment of assets come under the purview of Accounting Standard 136 (AASB 136). This accounting standard made under section 334 of the corporations Act 2001.AASB 136 recognises and measures the impairment loss of non-financial assets those not covered under in any AASB’s. Further this standard will also specify the methods of performing impairment tests, timings of conducting indication test as well as combination of assets under tests. Further AASB 136 also prescribes the method of reporting losses of impairment in financial reports, reversal conditions of impairment losses and last but not the least disclosure methods and the requirements (AASB-136, 2007). The main purpose of this standard is to assure that entities cannot carry assets more than the recoverable amount. Entities are required to impaired assets and charge impairment loss in the books of accounts. It includes an exception which states that if the carrying amount is more than the amount to get recovered through use or sale of asset, then in that case entities can carry assets more than the recoverable amount in their books (Paragraph 1).This standard is applicable to those entities which prepares books of accounts in accordance with Corporation Act 2001 (AASB-136, 2007). This standard applicable to non-financial assets such as buildings, furniture, fixtures, subsidiaries, associates, joint ventures, equipment, goodwill, machineries etc. (AASB-136, 2007). Further Paragraph 2 of AASB 136 states that the applicability of this standard does not extend to book impairment loss of inventories, construction contracts assets, deferred tax
Corporate Accounting and Reporting: Impairment Loss of Cash Generating Units_3

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