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Dear teachers,
Could you please, explain the calculation of impairment allocation on pro-rata basis? Could not find the formula.
Thank you!
Hi,
There is no formula as such. To pro-rata the remaining impairment then you will need to look at the total value of assets that have yet to be impaired and then use each assets value as a proportion of that total to allocate the impairment.
As an example if there were three assets, say, of 20,000/30,000/50,000 then the total is 100,000. We would then take 20,000/100,000 and 30,000/100,000 and 50,000/100,000 for each asset to allocate the impairment.
Thanks
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