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CA Intermediate · Advanced Accounting · AS 28 Impairment of Assets

Godavari Foods Ltd. bought a machine on 1 April 2022 for ₹10,00,000, with a 10-year life and nil residual value (straight line, historical cost model). On 31 March 2024 an impairment loss of ₹1,60,000 was recognised, leaving a carrying amount of ₹6,40,000 and the remaining life of 8 years. What is the depreciation charge for the year ended 31 March 2025 under AS 28?

The depreciation charge is ₹80,000. After an impairment loss, AS 28 requires depreciation to be revised to allocate the revised carrying amount, less residual value, over the remaining useful life: ₹6,40,000 divided by 8 years equals ₹80,000.

  1. A₹80,000Correct
  2. B₹1,00,000
  3. C₹64,000
  4. D₹1,20,000

Explanation

After impairment, depreciation is adjusted to allocate the revised carrying amount, less residual value, over the remaining useful life. 6,40,000 ÷ 8 = ₹80,000. Continuing at the original ₹1,00,000 ignores the impairment.

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