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As 28
As 28
As 28
The standard is mandatory from 1-4-04 for all enterprises whose Equity or dept
securities are listed on a recognized stock exchange in india and also enterprises
which are in the process of issuing equity or dept securities that will be listed in a
recognized stock exchange in india.
The standard is also mandatory from 1-4-04 for all other commercial, industrial
and business reporting enterprises, whose turnover for the accounting period
exceeds Rs.50 crores.
The standard comes into effect for all other enterprises in respect of accounting
periods commencing on or after 1-4-2005.It is mandatory for these enterprises
from 1-4-2005 itself.
Objective:
The standard presents the procedure that an enterprise applies to ensure that its
assets are carried at no more than their recoverable amount.
Main Features:
1.An asset is carried at more than its recoverable amount if its carrying amount
exceeds, the amount to be recovered though use or sale of the asset. If this is the
case the asset is to be described as ‘impaired’. The enterprise has to record an
impairment loss.
Explanation
This standard lays down the procedures that need to be followed when there is a
reduction in the value of the assets so as to ensure that the carrying amount of
the assets does not exceed the recoverable amount. This standard also specifies
the reversal of the impairment losses and the disclosures to be made in respect of
the impaired assets at the end of the Financial Year.
The standard is applied on all assets except the following:
a. Inventories (Covered in AS – 2)
Note: Carrying amount means the book value of the assets after the depreciation
and any other revaluation done by the enterprises. Recoverable amount is the net
selling value or value in use whichever is higher.
Disclosures:
a).The amount of impairment losses recognized in the statement of profit and loss
during the period and the line items of the statement of profit or loss in which
those impairment losses are included.