Corporate Accounting and Reporting 2: An Analysis of Asset Impairment
VerifiedAdded on 2020/05/16
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This report provides a detailed analysis of corporate accounting and reporting, focusing on the concept of asset impairment. It explains how a decrease in an asset's net carrying amount can lead to unrevealed cash flows, and how impairment occurs when an asset's ability to generate benefits declines. The report emphasizes the importance of recognizing influential dynamics like market changes and obsolescence when assessing impairment. It outlines the process of determining an asset's fair market price, comparing it to its carrying value, and recognizing impairment loss if the fair market value is lower. The report references key accounting standards such as AASB 136 and IAS 16, explaining how impairment loss is measured, recognized in the income statement, and treated in relation to revaluation surplus. The report also provides a practical example using XYZ, illustrating the accounting treatment of impairment loss, including the offset against revaluation surplus and the adjustment of depreciation expense in subsequent years. Finally, the report includes a list of relevant references.
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