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Thread: Impairment Loss/gain and Revaluation Loss/gain

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    siddharth's Avatar
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    Default Impairment Loss/gain and Revaluation Loss/gain

    Hi

    Can anyone explain me what is the difference between Impairment loss/gain and revaluation loss/gain ?

    Regards

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    Hi there

    Impairement loss is the difference between the FV of an asset usually an intangible asset e.g. Goodwill and its carrying value.

    Revaluation loss/gain is the difference between the FV of an asset and his book value.It may be that an asset was previously revalued but then subsequently decreased in its value and is called revaluation loss. Impairment here could be when the decrease in value is so large that not only does it eats up all the previous revaluations but also even decreases more value.

    The difference in the terms is marginal and is usually used for intangible and tangible assets.

    Hope this helps.

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    Afolabi kadijat is offline New Member (0-29 posts) Afolabi kadijat is on a distinguished road
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    hello all.
    pls can someone help with the treatment of impairment loss in group a\c

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    ahyee1021 is offline New Member (0-29 posts) ahyee1021 is on a distinguished road
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    if the impairment loss is on non-current assets
    if the impairment loss happen at the date of acquisition,u have to take it into account of calculation of goodwill as at acquisition date (only the control %).

    non-current assets, NCI and retained earnings c/f in statement of financial position are needed to reduce by that amount. however, if the retained earning c/f already include the impariment loss(already deducted),and the calculation of goodwill has take impariment loss into the account,the calculation for retained earnings needed to add back that amount since that there is duplicate amount for the transaction.(refer to dec07 Plateau)

    if the impairment loss is on goodwill
    1.using the old method
    the adjustment needed to make is the calculation of goodwill and calculation of retained earnings have to be deducted for the impairment loss(full amount)

    2.using the new method
    deduction from calculation of goodwill and retained earnings should be only the cotrol %.

    the NCI also have to be deducted for the impairment loss on goodwill for its %.

    hope i m not wrong and can help u.

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    jomahony1978 is offline New Member (0-29 posts) jomahony1978 is on a distinguished road
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    its worth noting for the UK stream:

    Revaluations are optional but impairment reviews/ write downs are compulsory.

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    siddharth's Avatar
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    Yes, i got the idea about it. thanks a lot friend

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    karebear is offline New Member (0-29 posts) karebear is on a distinguished road
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    Default Impairment

    In the answer to a past question (Shiplake), it states that values must be revised if new evidende becomes available about the values as at the date of acquistion. THese revisions should be made up to twelve months after the date of acquisition.

    My query is , if the information became available mid-way in the year,would these adjustments stil be accounted for at the date of consolidation.

    looking forward to a response.thanks.

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    siddharth's Avatar
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    Hi Kareb,

    I dont understand your question properly.

    Can you put it as a example and tell me.

    Regards

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    santoshkumar Ge is offline New Member (0-29 posts) santoshkumar Ge is on a distinguished road
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    There is no terms like impairment loss/ gail and revaluation loss/gain.

    if the asset book value is less than its fair value it is Revaluation surplus. if the book value is more than fair value of the asset it is called as impairment loss.

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    pasan malinda is offline New Member (0-29 posts) pasan malinda is on a distinguished road
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    hi friends
    impairment loss is happen when a assets recoverable value is lower than the carrying value
    recoverable value is higher amount of net realizable value(selling value -selling cost)& value in use(present value of assets cash flows)
    but revaluation is a separate process
    revaluation loss or revaluation profit comes when there is a change between assets historical cost & fair value :)

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    santoshkumar Ge (05-11-10)

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