# AS 28: Treatment of Impairment Loss — Revaluation Reserve
## General Rule
Impairment loss is recognized as an expense in Profit & Loss account.
## Exception — Asset Previously Revalued
When an asset has been upward-revalued in prior periods and a Revaluation Reserve exists for that specific asset:
### Sequence of Adjustment
| Step | Action |
|---|
| 1st | Debit Impairment Loss against Revaluation Reserve (up to available balance) |
| 2nd | Any remaining impairment loss → charge to P&L |
> This prevents double-counting: the upward revaluation was credited to the reserve; the impairment reverses that gain before hitting the income statement.
## Post-Impairment Carrying Amount
Revised CA = Recoverable Amount (RA)
## Edge Case: If RA = Zero
If both VIU = 0 and NSP ≤ 0 (disposal costs exceed sale price), then:
RA = 0 → Impairment Loss = Full CA → Revised CA = zero
### Example 1
Illustration 11 — With Revaluation Reserve:
Cost of Plant = ₹5.00 crores
Accumulated Depreciation = ₹4.15 crores
CA on 31.03.Y1 = ₹0.85 crores
Current year depreciation = ₹0.25 crores
CA on 31.03.Y2 = ₹0.60 crores
RA Computation (31.03.Y2):
- NSP = ₹24 lakhs = ₹0.240 crores
- VIU = ₹24.5 lakhs = ₹0.245 crores
- RA = max(0.240, 0.245) = ₹0.245 crores
Impairment Loss = ₹0.60 − ₹0.245 = ₹0.355 crores
Revaluation Reserve balance = ₹0.12 crores
Treatment:
- Adjusted against Revaluation Reserve = ₹0.12 crores
- Balance to P&L = 0.355 − 0.12 = ₹0.235 crores
Revised CA = ₹0.245 crores
### Example 2
Extension of Illustration 11 — If RA = Zero:
CA before impairment = ₹0.60 crores
VIU = ₹0
NSP: SP = ₹0, Cost of disposal = ₹0.02 crores → NSP = −₹0.02 → treated as ₹0
RA = max(₹0, ₹0) = ₹0
Impairment Loss = ₹0.60 crores
(First ₹0.12 crores against Revaluation Reserve; remaining ₹0.48 crores to P&L if no reserve)
Revised CA = ₹0