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CMA Final · Corporate Financial Reporting · Impairment of Assets (Ind AS 36)

Meera Ltd has an asset with carrying amount ₹50 lakh and recoverable amount ₹44 lakh at the year end. Which statement is correct?

Meera Ltd should recognise an impairment loss of ₹6 lakh in profit or loss. The carrying amount of ₹50 lakh exceeds the recoverable amount of ₹44 lakh, so the asset is reduced to recoverable amount, and for an asset carried at cost the loss goes to profit or loss immediately.

  1. ARecognise impairment loss of ₹6 lakh in profit or loss for an asset carried at costCorrect
  2. BRecognise no loss because recoverable amount is above fair value
  3. CReduce the asset to ₹50 lakh by a revaluation reserve
  4. DDisclose the shortfall only in notes

Explanation

When carrying amount exceeds recoverable amount, the asset is written down to recoverable amount, and the loss of 6 lakh (50 - 44) is recognised immediately in profit or loss for an asset carried at cost. Disclosure alone is not enough.

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