This article discusses the primary impairment theories and asset impairment decisions in corporate accounting and reporting. It explains the concept of impairment and how it comes into effect when the carrying value of the asset rises higher than the recoverable value. The article also discusses the dispersal of the impairment loss and the exceptions to the rule. It concludes with a discussion on the accounting losses and how they are managed.

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Impairment Theories and Asset Impairment Decisions

Corporate Accounting and Reporting

This assignment focuses on analyzing an impairment loss situation involving a machine asset within a company. It examines the assumptions made regarding the machine's replacement and the impact of its cash-generating unit (CGU) on the recoverable amount calculation. The analysis delves into the accounting treatment for impairment losses, considering the potential allocation of losses across assets within the CGU and the role of fair value less disposal costs in determining the impairment.

Impairment Loss and Asset Revaluation

The assignment content discusses corporate accounting and reporting, specifically the impairment loss of cash generating units excluding goodwill. It outlines the Accounting Standard 136 (AASB 136) which recognises and measures the impairment loss of non-financial assets not covered under other AASB standards. The standard specifies methods for performing impairment tests, timing of conducting indication tests, and combination of assets under test. It also prescribes methods for reporting losses of impairment in financial reports, reversal conditions of impairment losses, and disclosure requirements.