Asset Impairment Accounting

Hello everyone,

We have requirement to implement Impairments process and we completed the setup which are; DEFINE CASH GENERATING UNITS, ASSIGN CASH GENERATING UNITS and SETUP IMPAIRMENT ACCOUNTS however this is generating accounting entry as

Example:

·      Asset with a current NBV of $100: 

·      Cost = $150 & Acc Deprn = $50

·      Impairment of asset by 20% (New NBV =$80)

Based on setup following entry is created

Dr. Impairment Expense A/c $20

Cr Impairment Reserve A/c $20

As per, instruction from our accounting team we need following entry.

(Cost & Accu Deprn account would per asset category to which impairing asset belongs)  

                Dr. Accum. Deprn.                  $50

                Dr. P&L (Gain & Loss)                 $20