COMMERCE 4AC3 Chapter Notes - Chapter 7: Book Value

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 4AC3
• Professor: Kevin Veenstra

Document Summary

Impairment of assets apply to the valuation of all assets except specifically excluded by a standard. Assets are required to be carried at no more than their recoverable amount. An asset or group of similar assets should be written down if its carrying amount exceeds the amount to be recovered through use or sale of the assets. The write down is an impairment loss to be reported in the net income (unless the asset has previously been reflected at the revalued amount) If either (a) or (b) exceeds carrying amount then the asset is not impaired and the other value needs to be determined. If there is no available market for the asset it may be difficult to determine (a), in which case the value from (b) is acceptable for recoverable amount. Value in use is the present value of future cash flows expected to be derived from the asset or group of assets.