Publication date: 2014-05-16 11:53:12. Under the Generally Accepted Accounting Principles(GAAP), all the assets should be impaired when the fair value is less than the book value. FA Period: The fixed asset period that the impairment was posted. The Asset Level tab displays the following impairment details: Reference Number: Assigned to record at the time it was originally processed. New and Changed Features in Release 12 for Fixed Assets Definition: The impairment test is the testing procedures that perform by the companies on the assets that they have to find out if the assets are impaired that make the carrying value of assets in the reporting date less than the recoverable value of assets. 3. floods, or more specific in nature such as a fire in a complex. Fixed Assets. When a company is required to record an impairment of a fixed asset, the financial repercussions can be significant. What happens if an impairment test becomes necessary? Identifying an Asset that may be impaired At each reporting date, review all assets to look for any indication that an asset may be impaired (its carrying amount may be in excess of the greater of its net selling price and its value in use). Ind AS 36 has a list of external and internal indicators of impairment. An entity is required to first assess whether an asset (including goodwill) is showing indicators of impairment and, if it is, calculate the recoverable amount. To perform this task, follow these steps: Click Fixed assets > Common > Fixed assets > Fixed assets. In addition to this requirement, the following assets are tested for impairment regardless of whether an indicator exists: • goodwill; • indefinite life intangible asset; and • intangible asset not yet available for use. An impairment occurs when the carrying amount (book value) of an asset exceeds its recoverable amount Recoverable amount is the value of economic benefits we can obtain from a fixed asset. It can happen to property, equipment, vehicles or other fixed assets. The balance of this white paper will focus on fixed asset revaluation and impairment under both U.S. GAAP and IFRS. In this case, the asset is impaired when it no longer produces the benefits for the client as it did in the past. Another indicator of potential impairment occurs when an asset is more likely than not to be disposed prior to its original estimated disposal date. The impairments are heavily dependent on factors such as the path of the virus, government restrictions on business operations, government aid, and consumer confidence. Where indicators of impairment exist, the asset must then be tested for impairment. The standard provides several examples of events or circumstances that would require an asset’s carrying value to be tested for impairment, including “a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator.” (ASC 360-10-35-21 (c)) There are several indicators that may lead to an impairment of the asset. If such a situation persists, the firm must estimate the recoverable value of an asset. This is referred to as impairment. Hence, the recoverable amount equals the higher of fair value less costs to sell and value in use. Publications Financial Reporting Developments. Economic or legal factors may have changed significantly. External indicators of impairment of fixed assets. Prior to diving deeper into this subject, it is useful to run through a list of R12’s new features relating to fixed assets. Companies should regularly check for their assets and look for the indicators of impairment on a regular basis. Economic benefits are obtained either by selling the asset or by using the asset. Impairment Date: The original date of the impairment. Update impairment indicators for a fixed asset. The assets that are likely to be impaired are those that are obsolete or those that are likely to be exposed prior to their estimated useful life. +49 (0) 40 4290 7552. revised cash flows and/or adjusted discount rate). How to Determine if a Fixed Asset is Impaired Depending on which standard is being used, impairment tests for long-lived assets should follow a two- or three-step process. While impairment losses provide only a lagging indicator of negative developments, this does not reduce the importance of ensuring that the reported values for goodwill and other intangibles reflect an appropriate value. Only one asset impairment can be linked and reversed per revaluation. 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