What is included in the asset impairment loss in the income statement?

An asset impairment loss is a loss caused by the carrying amount of an asset being higher than its recoverable amount.

The new accounting standards stipulate that the scope of asset impairment is mainly the treatment of impairment of fixed assets, intangible assets and other assets unless otherwise specified. The "Asset Impairment" standard has changed the practice that impairment provisions for fixed assets and intangible assets can be reversed after they are accrued, and once the asset impairment loss is recognized, it cannot be reversed in the subsequent accounting period, eliminating the possibility of some enterprises adjusting profits through making secret provisions, and limiting the artificial fluctuation of profits.

Determination of asset impairment losses.

1. If the measurement results of the recoverable amount show that the recoverable amount of the asset is lower than its book value, the book value of the asset shall be written down to the recoverable amount, and the written down amount shall be recognized as an asset impairment loss, which shall be included in the current profit or loss, and the corresponding asset impairment provision shall be made at the same time.

2. After the asset impairment loss is recognized, the depreciation or amortization expense of the impaired asset shall be adjusted accordingly in the future period, so that the adjusted book value of the asset (net residual value deducted) can be systematically apportioned over the remaining useful life of the asset.

3. Once the asset impairment loss is recognized, it shall not be reversed in the subsequent accounting period.

Provision for bad debts, provision for inventory decline, impairment provision for held-to-maturity investment, impairment provision for financial assets, provision for short-term investment, impairment provision for long-term equity investment, impairment provision for investment real estate, impairment provision for fixed assets, impairment provision for construction in progress (engineering materials), impairment provision for productive biological assets, impairment provision for intangible assets, impairment provision for goodwill, provision for loan losses, impairment of mining equity, etc.

There are two criteria for the regulation of asset impairment losses: one is for financial assets, and the other is for fixed assets, intangible assets, investment real estate, long-term equity investments and other assets measured in a cost mode.

For financial assets: There are three categories, one is held-to-maturity investments, loans, and receivables, which are compared according to the book value and the present value of future cash flows. One is the financial assets that can be used for the first time, which is compared with the book value and the fair value, and the impairment is recognized when the fair decline is fast and the expectation cannot be recovered, and the other is the inventory, which is compared with the book value and the net realizable value.

For the above-mentioned fixed assets, the recoverable amount of the asset is compared with the book value to recognize the asset impairment loss. The recoverable amount is the higher of the present value of the future cash flows of the asset and the fair value minus disposal costs.

There are also biological assets and goodwill.

These two general enterprises are not used much.

Asset impairment loss refers to the corresponding loss recognized by the enterprise on the balance sheet date, after testing the asset, and judging that the recoverable amount of the asset is lower than its book value, and the provision for asset impairment loss. In principle, all assets of an enterprise should be recognized and measured in a timely manner when all assets are impaired, so asset impairment includes the impairment of all assets.

Asset impairment loss refers to the loss caused by the book value of the asset being higher than its recoverable amount, which belongs to the profit and loss account and affects the profit. The counterparty account for asset impairment losses is the provision for impairment of various assets.

The asset impairment loss should be filled in the "asset impairment loss" column on the income statement, and the data that needs to be filled in are "the number of the current period" and "the cumulative number of the current year".

Asset impairment losses belong to the profit and loss account, which is used to calculate operating results, and the financial presentation of operating results is reflected through the income statement. The income statement is a statement that reflects the operating results of an enterprise in a certain accounting period. Item 7 of the income statement:

Asset impairment losses reflect the impairment losses incurred by the enterprise.

What is an asset impairment loss

Asset impairment loss refers to the loss caused by the carrying amount of the asset being higher than its recoverable amount, and the new accounting standard stipulates that the scope of asset impairment is mainly the impairment treatment of fixed assets, intangible assets and other assets unless otherwise specified.

The "Asset Impairment" standard has changed the practice that impairment provisions for fixed assets and intangible assets can be reversed after they are accrued, and once the asset impairment loss is recognized, it cannot be reversed in the subsequent accounting period, eliminating the possibility of some enterprises adjusting profits through making secret provisions, and limiting the artificial fluctuation of profits.

The provision for asset impairment losses will result in a decrease in operating profit, which in turn will lead to the impact of total profit and net profit.

It can be understood more clearly from the formula for calculating the profits

Operating profit = operating income Operating costs Taxes and surcharges Selling expenses Administrative expenses Financial expenses Asset impairment losses Credit impairment losses + fair value change gains (fair value change losses) + investment gains (investment losses) + asset disposal gains (asset disposal losses) + other income.

Total profit = operating profit + non-operating income - non-operating expenses.

Net Profit = Gross Profit - Income Tax.

Asset impairment provisions" on the impact of the enterprise:

1. The provision of "asset impairment provision" has turned some companies from profit to loss. Since the eight provisions need to be directly included in the management expenses, and then write off the company's profits, the impact of the provision on some listed companies is also obvious. The introduction of the asset impairment provision policy has compressed the company's space for manipulating profits through the provision for asset impairment.

2. Some enterprises use "asset impairment provisions" to manipulate earnings. "Asset impairment provision" gives enterprises more power to make professional judgments, but at the same time, it inevitably brings new problems, because the conditions and measurement standards on which enterprises make judgments are different, or for certain needs, "asset impairment provisions" may also become a new tool for enterprises to "manipulate" profits.

Although some of these asset impairment may indeed exist, in order to avoid losses in previous years, the enterprise did not make any provision for impairment or did not make sufficient provision for impairment, but in full in the year of loss, it is reasonable for these assets to make impairment provisions in terms of their amount, but the timing of the provision is incorrect, resulting in unreasonable intertemporal earnings management.

How does asset impairment loss affect net profit?

The asset impairment loss account is a profit and loss account, so it will definitely affect the net profit. However, this account does not appear in the balance sheet, but generally appears in the income statement, under the financial expense.

Operating profit = operating income - operating costs - business taxes and surcharges - operating expenses - administrative expenses - financial expenses - asset impairment loss + fair value change gain (or minus change loss) + investment income (or less investment loss).

Among them, operating income includes "main business income" and "other business income";

Total profit = operating profit + non-operating income - non-operating expenses.

Net Profit = Total Profit - Income Tax Expense.

So the two are not necessarily the same.

How asset impairment losses affect the income statement. Once the asset impairment loss is recognized, it cannot be reversed in the subsequent accounting period, which eliminates the possibility of some enterprises adjusting profits by making secret provisions, and limits the artificial fluctuation of profits. Asset impairment losses are profit and loss accounts in accounting.