• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Impairment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Impairment

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 19, 2023 at 4:32 am #697034
    Syed Ahsan Ali
    Participant
    • Topics: 136
    • Replies: 85
    • ☆☆☆

    I’ve a confusion regarding depreciation, amortization and impairment.

    Is it correct that:

    1. Depreciation is the devaluation of non-current assets?

    2. Amortization is the devaluation of intangible assets?

    3. Impairment is the reduction in the value of assets when the book value of assets is more than their fair value which means the asset is less worth at the time of sale.

    4. What is the difference between all of them then?

    5. The journal entries for amortization and impairment are:

    Amortization expense (debit)
    Amortization liability (credit)

    Impairment expense (debit)
    Impairment liability (credit)

    6. How the depreciation, amortization and impairment are recorded in the consolidation financial statement?

    December 19, 2023 at 8:09 am #697038
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    1 to 3 are correct.

    Depreciation and amortisation are effectively different words for the same thing. Impairment is the reduction in value for unforeseen circumstances (as opposed to simply the ‘using-up’ of an asset, but it not really relevant for Paper FA.

    The journal entries are the same as for depreciation which are explained in detail in my free lectures (and there is no liability involved). The are recorded in the consolidated accounts in the same way as in the accounts for single companies which again is explained in my free lectures.

    December 21, 2023 at 12:31 am #697139
    Syed Ahsan Ali
    Participant
    • Topics: 136
    • Replies: 85
    • ☆☆☆

    Thank you so much. Could you correct me on the entries?

    1. The journal entry for depreciation is:
    DR Depreciation expense
    CR Accumulated depreciation

    2. The journal entry for amortization is:
    DR Amortization expense
    CR Accumulated amortization

    3. The journal entry for impairment is:
    DR impairment expense
    CR non-current asset

    4. In consolidation, the depreciation expense will be less from Group retained earnings while accumulated depreciation will be less from non-current asset in SOFP and same treatment goes for amortization?

    5. In consolidation, the impairment expense will be less from Group retained earnings while reducing the value of non-current asset?

    6. You said that ‘Impairment is the reduction in value of an asset for unforeseen circumstances as opposed to simply the ‘using-up’ of an asset’. Is that true that impairment is actually the decrease in the market value of an asset which happens due to any damage to an asset, any natural disaster or simply change in consumer demand etc?

    7. I have seen that you used market value and fair value interchangeably but what is the distinction?

    Is that alright?

    December 21, 2023 at 8:34 am #697153
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I am sorry but this forum is to help people who are studying for the Paper FA exam. You are asking questions in the forums for many different ACCA exams – you are obviously not studying for Paper FA.

    Everything needed to be able to pass the Paper FA exam is covered in my free FA lectures (and I really don’t know why you are quoting again journal entries that are stated in the notes and the lectures).

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Impairment’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • kennedyavege@2023 on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)
  • mrjonbain on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in