## AS 28 — Impairment of Assets: Scope and Core Concept
### What Does AS 28 Do?
AS 28 ensures that assets are never carried at more than their Recoverable Amount on the balance sheet. If an asset's book value exceeds what you can recover from it, you must write it down.
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### Assets Excluded from AS 28
AS 28 applies to all assets EXCEPT the following (each covered by a separate AS):
| Excluded Asset | Governing Standard |
|---|---|
| Inventories | AS 2 |
| Assets arising from construction contracts | AS 7 |
| Financial assets including investments | AS 13 |
| Deferred Tax Assets | AS 22 |
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### When Is an Asset Impaired?
An asset is impaired when:
> Carrying Amount (CA) > Recoverable Amount (RA)
| Term | Meaning |
|---|---|
| Carrying Amount (CA) | Cost less accumulated depreciation and impairment losses (book value) |
| Recoverable Amount (RA) | Higher of: Value in Use (VIU) and Net Selling Price (NSP) |
| Impairment Loss | CA − RA (only recognised when CA > RA) |
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### The Impairment Test — Decision Rule
```
Calculate RA = Higher of (VIU, NSP)
If CA ≤ RA → No impairment. Carry forward at CA.
If CA > RA → Asset impaired. Recognise Impairment Loss = CA − RA.
```
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### Key Point: RA Cannot Be Negative
If NSP is negative (disposal costs exceed selling price), treat NSP as zero. Any residual obligation is accounted for under AS 29 (Provisions). The impairment loss is limited to bringing CA down to zero (or the RA if positive).