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Introduction
This chapter contains the following sections (each section starts on a new page): In the year of impairment The year following impairment Assumed Knowledge This chapter assumes you are already familiar with the accounting concepts governing fixed asset impairments.
If an impairment loss is charged prior to the year end and depreciation is charged In this very unlikely situation you will need to override the depreciation charge calculated by the program to reflect the new depreciation charge due to the impairment of the fixed asset. Go to 'If depreciation is charged on the asset which has incurred an impairment loss ' on the next page for further details. To override the depreciation charge calculated by the program: Go to the cell 'Depreciation charge in accounting period' (column V). Unprotect the worksheet (there is no password). Enter (overwrite) the depreciation charge. Protect the worksheet (without a password). The link to the calculated depreciation charge will be restored after you have run the year end procedure.
If depreciation is charged on the asset which has incurred an impairment loss The depreciation charge after impairment is based on the new value of the asset and its remaining useful life. Therefore, the asset will need to be re-registered in the fixed asset program in order for the depreciation charge to be calculated correctly. To re-register the fixed asset which has incurred an impairment loss: Go to the the fixed asset which has been impaired. In the Date cell (column C), enter the date when the impairment loss was incurred. Normally impairments take place at the end of the financial year and if this is the case, enter the year end date of the previous year. A warning message will appear when entering assets prior to the current accounting period. When the warning message appears, click 'Yes' to confirm the date. In the Cost / Value cell (column F), enter the new value of the fixed asset (after the impairment loss). In the cell 'Year 1 Depreciation Months' (column M), enter the number of months of the new depreciation charge that was applied in year 1 (i.e. the previous year). This depends on when the impairment occurred in the previous year. If the impairment took place at the end of the financial year, enter 0 (months) and select 'No' in the cell 'Year 1 Depreciation Month of Purchase Included (Yes / No)?'. In the Useful Life cell (column S), enter the estimated remaining useful life of the asset from the date of impairment. Go the 'Depreciation charge in the accounting period' cell (column V) and confirm that the new depreciation charge for the asset has been calculated correctly.