message for Steve

Glynis

I have sent you a PM asking for your help on a DFS matter which you have not replied to. Could you help me please. I am getting quite anxious we have exams next week.

Glynis





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taskey

on a previous post steve has said he is busy this week, but can be contacted by email. i dont have his email, but i am sure someone will be along shortly and will be able to give you his email, or if you post your problem, someone might be able to help.

Tracy

Steve Collings

Hi Glynis,

Please accept my apologies for not coming back to you sooner re your query. I have been dealing with ACCA student queries via AccountancyStudents for the last couple of days as they are doing their exams and am finishing work on Friday for a holiday so have mountain of work to chip away at this week!:crying:

I have dropped you a line via PM and will answer your query on here as it may benefit other DFS candidates. The query concerned impairment of assets.

Assets cannot be carried in the balance sheet at any more than their recoverable amount. If recoverable amount is lower than the carrying amount, then an impairment adjustment is necessary to reduce the carrying value to recoverable amount.

You need to understand that recoverable amount is the HIGHER of fair value less costs to sell and value in use. Any impairment is written off to the income statement. Be aware that the examiner could include an asset impairment in a balance sheet question and by doing this, does not stop the double entry from taking place!

If you are presented with a situation where a non current asset is impaired and you are doing a (consolidated) balance sheet then remember that the entry is CR non current asset (to reduce the carrying amount to recoverable amount). The corresponding debit must go against the retained earnings figure (to reduce the retained earnings).

Regards

Steve