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The financial information of each business line for 2019 is shown below: The company estimates that the production process of the two business lines will end in June 2020. Impaired capital event occurs when a company's total capital becomes less than the par value of the company's capital stock. Unlike impairment, which accounts for an unusual and drastic drop in the fair value of an asset, depreciation is used to account for typical wear and tear on fixed assets over time. However, if there are no identifiable cash flows at this low level, it's allowable to test for impairment at the asset group or entity level. if they have become wholly or partially obsolete, or if their selling prices have However, when a decline If impairment is confirmed as a result of testing, an impairment loss should be recorded. If these types of situations arise mid-year, it's important to test for impairment immediately. On January 30, 2021 before the financial statements are authorized, the national government eliminate the restriction on medicines prices and selling price of medicines is 4.500. increased. An accountant tests assets for potential impairment periodically; if any impairment exists, the accountant writes off the difference between the fair value and the carrying value. The accounting recognition is shown below: In June 2020, the entity recognizes the finished inventory of medicines, We must other items in that product line. Any write-off due to an impairment loss can have adverse affects on a company's balance sheet and its resulting financial ratios. In It is, therefore, very important for a company to test its assets for impairment periodically. 5 In some cases, an entity is required to submit its financial statements to its shareholders for approval after the financial statements have been issued. The Regulatory support for the impairment recognition of inventory is regulated in paragraph 28 of IAS 2. In some circumstances, however, it may be appropriate to group similar or related items. 4 The process involved in authorising the financial statements for issue will vary depending upon the management structure, statutory requirements and procedures followed in preparing and finalising the financial statements. amounts expected to be realised from their sale or use. Inventory write down is a process that is used to show the reduction of an inventory’s value, when the inventory’s market value drops below its book value. Net realizable value – Carrying amount > 0 = No impairment This is an example of two lines of business, line A and line B, the line A has a product called medicine production, the line B has two products called, control diabetes equipment production and control hypertension equipment production. An asset impairment procedure requires four stages to be completed. specified: To determine the impairment of the Inventory, the following formula should be used. the reporting period (adjusting events after the reporting period); Under generally accepted accounting principles (GAAP), assets are considered to be impaired when the fair value falls below the book value. Inventory write-down should be treated as an expense, which will reduce net income. It appears as a sudden and large decline in the fair value of an asset to below its carrying value. But, first of all, we must first understand what mean the net realizable value. Paragraph 32 of IAS 2 establishes that in general raw material  should not be written down, however, in paragraph 32 there is an exception and it is when finished products may be below the recoverable amount, to know if the finished products are sold above cost, it is necessary to estimate the costs required to complete production. Because new information emerged, the company must carry out a new evaluation of the impairment calculation for the product of business line A, the article 33 IAS 16 establishes what when there is evidence that the net realizable value has increased, and the previously recognized impairment will be reversed. To carry out the sale, the company incurs the following expenses. If we calculate the impairment of the business line globally, we realize that there is no impairment in business line B, it is generally considered that products that have similar characteristics may belong to the same business line and are Sell in the same geographic area in accordance with IFRS 8, operating segments. We must carry out a new check of impairment, but now we will to use the following formula because we are talking about finished products.

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