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Hi,
I was doing a question on Intangible assets and was wondering, what is the difference between amortisation and impairment of asset ? I thought it was about the same concept.
Thanks
Both those (and depreciation) are ways in which the carrying value of an asset can be reduced.
Depreciation is applied to write off a tangible on-current asset off over its estimated useful life
Amortisation is the same except that it is applied to intangible non-current assets
Impairment is where, as a one-off exercise, an asset’s carrying value is assessed where there are indications that the carrying value may be greater than the asset’s recoverable amount
Impairment is NOT an annual charge whereas depreciation and amortisation are
Ok?
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