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What is impairment cost?

Updated: 4/28/2022
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13y ago

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When assets are recorded a company's balance sheet, they are valued at historical cost (what was paid for the asset), less any accumulated depreciation or amortization if applicable. This holds true even if the market value of the asset is considerably more than what the company paid for it. However, if the market value of a company's assets drops significantly below the asset's historical cost, then it sometimes becomes necessary to revalue the asset at the lower market value. This revaluation is called impairment. When it is appropriate to impair an asset depends on the type of asset in question. The difference between the current book value of the asset, and the value of the asset after impairment, is your impairment expense (cost).

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What is the difference between amortization and impairment?

impairment is the decrease of fair value of an intangible asset where amortisation is periodic (usualy yearly) distribution of cost of an asset over its life. suppose a factory equipment worth 25000 and estimated life is 5 years, we will charge 25000/5=5000 /year on a straightline basis as amortisation. Now suppose with this equpment we can build something which required licencing...suppose the machine is used for making coca cola. To obtain the licence, the cost is 100,000. so the licence is an intangible asset. IAS reqires intangible ASSETS to be revalue atleast a year to see whether the fair value has increased/decreased. If the fair value is decreased from the cost/ carrying amount... we say the asset has impaired. And we record the value by which the asset has been impared. Note, Useful life has nothing to do with impairment. Fair value can be market value at the date of the impairment test.


What is the mean of impairment of the assets?

what is mean by assets register?


When is the restoration of an impairment loss permitted?

if the asset is hold for disposal


What is the difference between impairment and write off?

the same things


What is goodwill impairment?

Answer - Goodwill impairment occurs when the value of the goodwill of a business unit declines to an amount less than the carrying value of the goodwill on the company's books. With the adoption of SFAS 142 by the Financial Accounting Standards Board (FASB), audited companies are now required to test goodwill annually for impairment. This testing is done by valuing the business unit having the goodwill.

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