What is meant by "the carrying amount of an entity's net assets is lower than the entity's number of shares in issue multiplied by its share price"? Does this mean that carrying amount is lower than the market value of shares and so an impairment has not occurred?
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Impairment
Hi,
The carrying amount is the balance sheet value of the assets/liabilities and this is being compared to the market value of the shares. To get the market value, we multiply the number of shares in issue by the price per share.
If the market value is less than the book value, then we will need to impair the book value to reflect this.
Thanks
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