How to be a Effective Resource of corporate Accounting?
The decline in net carrying amount of the asset is above the generation of future unrevealed cash flows. The net carrying value could be obtained by deducting depreciation from the cost of asset acquisition. Impairment occurs when a firm sells or abandons its asset due to fall in its ability to fetch benefits. Thus, it is not needed to realise the impairment loss as loss in the profit and loss account of the firm. For calculating the impairment loss, the influential dynamics resulting in asset impairment are to be identified. Such influential dynamics include variations in the market conditions, new regulations, staff turnover or the obsolescence of the asset. Based on this, the fair market price of the asset is to be anticipated and it is the value to be obtained after it is sold in the market. This could be realised as asset's recoverable value or the expected generation of future cash flows, if the operation is continued. The fair market price is to be contrasted with the asset...