Asset impairment loss can be understood as the loss caused by the recoverable amount of an asset being lower than its book value, so what is the borrowing direction of asset impairment loss? How to make accounting entries?

Loan direction of asset impairment loss

Asset impairment loss is a kind of profit and loss account, which means that the loss increases by borrowing and decreases by lending.

Asset impairment loss refers to the loss caused by the book value of an asset being higher than its recoverable amount. If the recoverable amount of an asset is lower than its book value, the enterprise shall write down the book value of the asset to the recoverable amount, and the write-down amount shall be recognized as asset impairment loss, which shall be included in the current profit and loss, and the corresponding asset impairment reserve shall be accrued.

Once the asset impairment loss is confirmed, it cannot be reversed. The amount of assets impairment loss is the difference between the book value of assets and the recoverable amount of assets.

Accounting entries of asset impairment losses

1. When drawing:

Debit: Asset impairment loss

Loans: various asset impairment reserves.

2. When carrying forward the asset impairment loss at the end of the month:

Debit: this year's profit

Loans: Asset impairment losses

Asset impairment loss detailed account

The detailed items of asset impairment loss include: bad debt provision, held-to-maturity investment impairment provision, fixed assets impairment provision, long-term equity investment impairment provision, intangible assets impairment provision, construction in progress-impairment provision, goodwill-impairment provision, productive biological assets-impairment provision, loan loss provision, debt-paying assets-impairment provision, etc.

Is the asset impairment loss an expense?

The difference between asset impairment loss and asset impairment reserve

1. Asset impairment loss means that the asset has been confirmed to be impaired, so the loss should be confirmed; However, provision for impairment of assets cannot confirm that assets have been impaired, but may be impaired, so provision for impairment is needed.

2. Asset impairment loss belongs to the profit and loss category and is an account on the income statement; The impairment loss reserve is an asset class allowance account, representing assets.