Skip to Main Content
Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015
book

Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

by Steven Collings
April 2015
Intermediate to advanced content levelIntermediate to advanced
546 pages
17h 36m
English
Wiley
Content preview from Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 15Impairment of Assets

  1. Introduction
  2. Indicators that an Asset is Impaired
  3. Internal sources
  4. Impairment of Inventories
  5. Impairment of Other Assets
  6. Impairment of Cash-Generating Units
  7. Goodwill Impairment
  8. Reversal of Impairments
  9. Disclosures

Introduction

The underlying theme in financial reporting is that a company's assets should not be carried in the balance sheet (statement of financial position) at any more than recoverable amount. The idea behind this concept is to prevent a company from misleading users of the financial statements into thinking that a company's assets are higher than they are realistically worth.

Companies have been criticised in the past for including assets in the balance sheet that should not either be classified as an asset (i.e. expenditure that should have gone to profit or loss has been put on the balance sheet) or ignoring the need to revisit the carrying values of assets at each reporting date and consider whether, or not, the carrying values are appropriate in the light of all available facts to the management at the reporting date.

Section 27 Impairment of Assets places a specific requirement on companies under its scope to carry out impairment tests on assets when the carrying value of the asset (i.e. the value at which it is stated in the balance sheet) may be more than its recoverable amount. Section 27 does not, however, apply to the following types of assets:

  • Assets that arise through construction contracts (Section 23 Revenue and ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

New UK GAAP 2015: Application of FRS 100-102 in the UK

New UK GAAP 2015: Application of FRS 100-102 in the UK

Ernst & Young
Wiley GAAP 2008

Wiley GAAP 2008

Barry J. Epstein, Ralph Nach American Express Tax and Business Inc., Colorado Steven M. Bragg Englewood

Publisher Resources

ISBN: 9781118819258Purchase book