📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    The excess of the carrying amount of an asset over its

    recoverable amount is known as ________ and is recognised as ________.
    A Depreciation; an expense in the Profit and Loss Account Correct Answer Incorrect Answer
    B Revaluation surplus; Capital reserve in Balance Sheet Correct Answer Incorrect Answer
    C Impairment loss; an expense in the Profit and Loss Account Correct Answer Incorrect Answer
    D Capital loss; Capital reserve in Balance Sheet Correct Answer Incorrect Answer
    E Amortization; accrued expenses in Balance Sheet Correct Answer Incorrect Answer

    Solution

    Impairment occurs when the recoverable amount is less than the carrying amount. The difference is recognized as an impairment loss. It is recognized as an expense in Profit & Loss Account immediately. After recognition,  revised carrying amount = Recoverable Amount.

    Practice Next
    More Financial Statement and Ratio Analysis Questions

    Relevant for Exams:

    ask-question