## Impairment Test — AS 28
An impairment test compares the Carrying Amount (CA) of an asset to its Recoverable Amount (RA).
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## Recoverable Amount
```
Recoverable Amount = HIGHER of:
(a) Value in Use (VIU) — Present value of future cash flows from using the asset
(b) Net Selling Price (NSP) — Amount obtainable on sale, net of disposal costs
```
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## Impairment Loss
| Situation | Treatment |
|---|---|
| CA > RA | Impairment Loss = CA – RA → Expense to P&L |
| CA ≤ RA | No impairment; asset stays at CA |
> There is NO concept of Impairment Gain. If RA > CA, the asset remains at CA (gain is NOT recorded).
Journal Entry for Impairment Loss:
```
Impairment Loss (P&L) Dr [CA – RA]
To Intangible Asset A/c [CA – RA]
```
After impairment, the revised CA = RA, and future amortization is based on this revised figure.
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## Impairment vs Revaluation
| Concept | Effect |
|---|---|
| Impairment | Only reduces asset value; never increases above cost |
| Revaluation | Can increase or decrease asset to fair value |
These are distinct and separate concepts under separate standards.