91Ó°ÊÓ

Impairment refers to a reduction of the market value of fixed or intangible assets, indicative of a reduction in the quantity, quality, or market value of an asset. The idea is that an asset should never be reported in a business's financial statements above the maximum amount that could be recouped through its sale.

Working notes:

Calculation of Impairment value

$\begin{array}{c}\text{Impairment}=\left(\text{°ä´Ç²õ³Ù o´Ú″¾²¹³¦³ó¾±²Ô±ð°ù²â}−\text{´¡³¦³¦³Ü³¾³Ü±ô²¹³Ù±ð»å d±ð±è°ù±ð³¦¾±²¹³Ù¾±´Ç²Ô}\right)−\text{±Ê°ù±ð²õ±ð²Ô³Ù v²¹±ô³Ü±ð}\\ =\left(\$900,000−\$380,000\right)−\$500,000\\ =\$520,000−\$500,000\\ =\$20,000\end{array}$

Note: Present value of future net cash flows* ($500,000) < Carrying amount ($520,000)*; therefore, the asset has been impaired. The impairment equals $20,000 ($520,000 – $500,000).

A recoverable amount is used because it is greater than fair value and has fewer costs to sell.