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There are examples in the course notes! An asset is impaired when the carrying value exceeds the asset’s recoverable amount. The recoverable amount is the higher of the asset’s value in use and its net realisable value.
Value in use is the net present value of the future cash flows attributable to that asset
Net realisable value is the net amount (net of selling costs) which could be realised were the asset to be sold
Examples:
change in management’s plans for the asset
output from the asset lower than anticipated
asset now technologically obsoleteThere are examples in the course notes! An asset is impaired when the carrying value exceeds the asset’s recoverable amount. The recoverable amount is the higher of the asset’s value in use and its net realisable value.
Value in use is the net present value of the future cash flows attributable to that asset
Net realisable value is the net amount (net of selling costs) which could be realised were the asset to be sold
Examples:
change in management’s plans for the asset
output from the asset lower than anticipated
asset now technologically obsolete
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