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Fixed Asset Impairment Testing

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Fixed Asset Impairment Testing

 

What is Fixed Asset Impairment?

 

Assets are said to be impaired when their carrying value, (acquisition cost – accumulated depreciation), is greater than the future un-discounted cash flow provided by the asset (recoverable amount).  Global accounting standards nominate assets should not be carried in the balance sheet at an amount greater than their recoverable amount.

External economic factors typically cause balance sheet impairment. To meet your management disclosure requirements and avoid ASIC scrutiny, Mitchell & Taylor undertake impairment testing of physical assets for the following reasons:

  • Changes in regulation and business climate
  • Declines in the asset’s utilisation
  • Technology changes
  • Forecasts of a significant decline in the long-term profitability of the asset
  • Damage to assets through natural disasters
  • Market Changes

To discuss Fixed Asset Impairment and how we can provide an accurate valuation solution, contact us now.