impairment.pptx - PMI IMPAIRMENT INDICATORS 1 Introduction...

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IMPAIRMENT - INDICATORS PMI 1
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Introduction Impairment – Fall in value of an asset, so that its ‘recoverable amount’ is now less than its carrying amount in the statement of financial position. Recoverable amount (RA) - higher value between: i) Asset’s FV less cost of disposal (NRV), or ii) Value in use (VIU) (NPV). PMI 2
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External sources During the period, an asset’s market value has declined significantly more than would be expected as a result of the passage of time or normal use; significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic and legal environment in which the entity operates or in the market to which an asset is dedicated; market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable
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