Requirements of AASB Assignment 2022

Issue 1
AASB 116 suggests that a decrease in the carrying amount of an asset up to its fair value as a ‘revaluation decrement’. However, as
per AASB 116, a reduction in the value of an asset up to its recoverable amount is known as an ‘impairment losses’ of an asset. With
regards to revaluation of an asset, the requirements of AASB 136 are first required to be applied for an asset before the requirements
of AASB 116 are applied. Hence, the revaluation of an asset occurs on the basis of the changes in the market conditions related to the
asset. This may again change in the future when there is an upward revaluation of the asset and the amount of asset goes up again.
Whereas, the amount of impairment loss is permanent and the loss written off against an asset suggests that the amount from the
asset cannot be recovered again. As per AASB 1041, the amount of revaluation decrement must be recognised immediately and as an
expense in the Profit and Loss Statement. However, any amount remaining as a surplus in the balance sheet also needs to be written
off against the asset. In case of an impairment loss, the amount of loss needs to be checked on a timely basis when there are any
signs related to the impairment of an asset. These are then reduced from the asset according to the guidelines of AASB 136.