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From Open Tuition Notes: Assets should be valued at lower of carrying amount and Recovarable Value
If reversal of impairment occurs is it true that:
1) treated as income in P&L
2) the carrying amount should be increased to its new recovarable amount?If yes:
So lets say carrying amount is lower than recovarable – we value asset at CarryingAmount.
and lets say reversal of impairment occurs so we increase the carrying amount to recovarable amount and actually value asset at higher value of this recovarable amountIm confused a little bit… am I missing here something Dear Tutor?
In your action of reversing a previous impairment, two matters to remember:-
1) the reversal shall not bring the carrying amount to a figure which is greater than the carrying amount would have been if we had not impaired in the first place
2) on the reversal, you will not increase the carrying amount to a value greater than the recoverable amount – you would be in breach of the principle that you yourself have quoted in your post “Assets should be valued at lower of carrying amount and Recovarable Value”
OK?
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