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Accounting
Standards Summary
Accounting Standard 28
Impairment
of Assets
Issuing
Authority: The Institute of Chartered Accountants
of India
Status:
Mandatory for the following:
- In respect
of accounting periods commencing on or after 1-4-2004
for:
-
Enterprises whose equity or debt securities are
listed on a recognised stock exchange
in India,and enterprises that are in the process
of issuing equity or debt secutities that
will be listed on a recognised stock exchange
in India as evidenced by the board of
directors'resolution in this regard; and
-
All other commercial,industrial and business reporting
enterprises,whose turnover for
the accounting period exceeds Rs.50 crores.
- In
respect of all other enterprises, mandatory from accounting
periods commencing
on or after 1-4-2005.
Scope
This standard does not apply to inventories,assets arising
from construction contracts,
deferred tax assets or investments as these are covered
by separate accounting standards.
Brief
Summary
An
enterprise should assess at each balance sheet date
whether there is any indication that an asset has been
impaired.Both external and internal sources of information
should be considered for this purpose.An asset is impaired
when the carrying amount of the asset exceeds its recoverble
amount.Recoverable amount has been defined as the higher
of an asset's net selling price and its value in use.Value
in use is the present value of estimated future cash
flows expected to arise from the continuing use of the
asset and from its proceeds of disposal.
Procedures for recognising and measuring impairment
of an individual asset and/or a cash-generating unit
have been spelt out in the standard.Further,requirements
for reversal of an impairment loss have also been laid
out.
Details
of impairment losses,reversals of impairment losses
etc. have to be disclosed in The financial statements
for each classes of assets.
Transitional
provisions have also been provided for.
Important
note:
The above is only a very brief outline of the accounting
standard.
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