Treatment of Impairment Losses on Profit and Loss and Statement of Financial Position

Christian Hill

Hi all

Just wondered what the treatment of an impairment loss would be on the Profit and Loss and Statement of Financial Position?
Would you credit the amount on the Profit and Loss and debit on the Statement of Financial Position or would you do this the other way round?

Thanks

Christian Hill

badhombre

Dr P & L (impairment = charge/ cost) and Cr whichever Bal Sheet account was impaired for eg Goodwill

Dan_Wright

Hi,

Per badhombre. If an asset is impaired, the recoverable amount is said to be less than the book value. Therefore would need to reduce (cr) the asset item on the SoFP, then charge the impairment loss to the profit or loss (dr)