Impairment Testing of Fixed Assets
An asset impairment arises when there is a sudden drop in the fair value of an asset below its recorded cost. It is necessary to test assets for impairment at the lowest level at which there are identifiable cash flows that are largely independent of the cash flows of other assets.
Financial accounting and reporting require analysis of impairing review of Tangible assets as and when circumstances indicate that there is a diminution in their valuation. IAS 36/Indian GAAP – AS 28 states— Impairment of Assets requires testing the valuation of the tangible fixed assets that have been long-lived and when required with other assets tested where the asset might be impaired. An individual tangible asset may be tested for impairment where independent cash flow can't be attributed for a single asset. Carrying value of the tangible asset compared to its recoverable amount – Fair Value less Cost of Disposal to determine whether the asset is impaired or not. Sapient has the required expertise and skills needed to perform fair impairment analysis for senior management, auditors, valuation professionals, and regulators. We determine the fair value of the asset or group based on appropriate methodologies.
The Valuation of Fixed Assets involving Plant & Machinery & Building as of date expand with carrying cost in the balance sheet. It is done to fulfill the requirement of IFRS and IND AS