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Report on Corporate Accounting and Reporting

   

Added on  2020-05-16

6 Pages1503 Words53 Views
Running head: CORPORATE ACCOUNTING AND REPORTING Corporate Accounting and ReportingName of the Student: Name of the University: Author’s Note:

1CORPORATE ACCOUNTING AND REPORTINGReversal of an impairment loss for individual assetThere has been an observation that one of the essential principles stresses on the factthat there is no demand for assets which have increased level of valuation in the financialreport. Therefore, this requires various other ideas and concepts related to the values inaccordance which the value that is undertaken by the asset can be differentiated in order toobserve if there are any additional left. AASB 136 has their Paragraph 1 explaining the factthat asset impairment explains the processes that have been implemented by each and everyorganization in order to make sure that the assets are being treated at their correct amounts,which does not cross the extent of the amount which can be recoverable (Aasb.gov.au. 2018).This paragraph even explains that in scenarios when the assets are carried forward over thevalue that has been recoverable, and then the amount that is recovered by selling the assets islesser than the carried amount of the assets. The assets in such circumstances can be regardedto be impaired and the standard of AASB needs the organizations to understand the lossesgained from the impairment that is inclusive of the impairment loss time and that of thedeclarations which are vital (Rennekamp, Rupar and Seybert 2014). In case of an asset, which has their carrying value higher than the value that isrecoverable, then the process impairment loss takes place (Ballas, Panagiotou and Tzovas2015). This is found to be of an increased value of the fair value of the assets minus the costof selling and the amount that is under exploitation. Therefore, by taking suggestion of AASB136, Paragraph 59, if the value of the asset that is recovered is lower than the carryingamount of the same, then the carrying amount requires to be curtailed in accordance to theasset value. This sort of curtailing is known as the impairment loss (Lobo et al. 2017). Themechanism of computing the impairment loss may be variable by looking at the informationthat whether the asset is maintained at the extent of cost or even follows the model ofrevaluation. In the same paragraph, the impairment losses requires to be realized

2CORPORATE ACCOUNTING AND REPORTINGimmediately excepting situations when the undertaking of the asset is being made at a valuewhich can be revaluated and is in compliance to some other standards (Detzen, Wersborgand Zülch 2015). These accounting standards are helpful in explaining the revolutionframework as it has been done in AASB 116. Hence, the loss of impairment which isassociated any asset that has been re-valued is needed to be regarded as a fall in therevaluation in accordance to the various other standards. The two processes by taking help of which the asset impairment can occur are the costframework and the revaluation framework (Penner, Kreuze and Langsam 2016). Inaccordance to AASB 136 Paragraph 61, in scenarios of the cost framework, when there hasbeen a recording of the asset that has been impaired with respect to cost, the loss incurredrequires to be identified without any postponements with respect to profits and losses. Thisexplicitly explains that the loss is needed to be identified as a cost in the disclosure report forthe company that is under consideration.Paragraph 60 of AASB 136, when the model of revaluation is considered then in casethe impairment is undertaken in cases of plant and machinery and even in equipment at there-valued amount, the losses in the impartment requires to be posted similar to the fall in therevaluation (Dvořák and Poutník 2017). For the intention of replication, the loss ofimpairment on the assets that have been re-valued is required to be realized in the incomestatement in the initial phase in order to ascertain that it does not go over amount that issurplus for the same asset. The target can be accomplished by taking help of debiting theleftover additional account, which thereby can be applicable to the assets that is inclusive ofthe liability of tax which is by nature deferred previous to any sorts of balance loss isregarded as a cost for the income statement.

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