Recoverable amount of an asset is defined in AASB 136 as the higher of its fair value less costs to sell and its value in use.In the case where an asset's carrying amount is less than its recoverable amount,which action is consistent with AASB 136?
A) recognise difference as increase is asset revaluation reserve
B) recognise difference as impairment loss
C) recognise difference as gain from reinstatement of asset
D) leave asset at its carrying amount

Question

Quizplus · Accepted Answer

According to AASB 136, if the recoverable amount of an asset is greater than its carrying amount, the difference should be recognised as a reversal of impairment loss. However, if the carrying amount is less than its recoverable amount, it indicates that the asset is impaired. In such a case, the difference should be recognised as an impairment loss in the income statement, and the asset's carrying amount should be reduced to its recoverable amount. Therefore, choice B is the correct option.

Recoverable Amount of an Asset Is Defined in AASB 136