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Accounting for ROU Asset Impairment

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edited Sep 21, 2021 2:58PM in Lease Accounting 4 comments

We are analyzing building 'Impairments' functionality for Lease Accounting. Your views/ideas will be helpful in designing this feature.

Q1. What is the popular way of accounting for 'Impairments' out of the three methods

a. Impairment Loss....Dr

Impairment Reserve..Cr

b. Impairment Loss...Dr

ROU Asset ..............Cr

c. Impairment Loss...Dr

Accumulated Amortization....Cr

Q2. Have come across few US customers who want to close Accumulated Amortization amount into ROU Asset during impairments and start fresh with ROU Asset original balance amount. For example:

ROU Original Value=10000

Accumulated Amortisation Bal=5000

Recoverable Value for the asset: 2000

Hence Impairment Loss= (10000-5000)-2000=3000

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