Accounting for IGCSE & O level - Final Statements (Section 8 - No. 25)
When is an asset considered impaired, and how is it handled in the financial statements?
When the asset's market value increases; it is revalued upwards.
When the asset's book value exceeds its recoverable amount; it is written down.
When the asset is fully depreciated; it is removed from the balance sheet.
When the asset is used for more than its useful life; it is written off.
Giải thích
Impairment occurs when the recoverable amount (the higher of fair value less costs to sell and value in use) is less than the asset's book value, requiring a write-down.