## AS 28 — Treatment of Impairment Loss
### When to Recognise
Impairment loss is recognised immediately when CA > RA.
---
## Two Accounting Models
### Model 1: Cost Model
Asset is carried at cost less accumulated depreciation.
- Entire impairment loss → Profit & Loss Account
```
Dr P&L / Impairment Loss XXX
Cr PPE / Intangible Asset XXX
```
---
### Model 2: Revaluation Model
Asset is carried at revalued amount (fair value).
Impairment must first be absorbed by the existing Revaluation Reserve (RR) for that asset.
Step 1: Set off impairment loss against RR balance (up to RR balance):
```
Dr Revaluation Reserve XXX
Cr PPE XXX
```
Step 2: If impairment loss > RR balance, remaining excess → P&L:
```
Dr P&L / Impairment Loss XXX
Cr PPE XXX
```
Summary Table:
| RR Balance vs. Impairment Loss | Treatment |
|---|---|
| RR ≥ Impairment Loss | Fully absorbed by RR; nothing hits P&L |
| RR < Impairment Loss | RR fully used; excess goes to P&L |
| No RR balance | Full impairment loss → P&L |
---
## Post-Impairment Depreciation
After recognising impairment, revise depreciation prospectively based on the new carrying amount:
```
Revised Annual Depreciation = (Revised CA − Residual Value)
÷ Remaining Useful Life
```
The original depreciation rate is not continued — it must be recalculated.
---
## Special Note: Carrying Amount Can Reach Zero
If RA = 0, impairment loss = full carrying amount. The asset is written down to zero.