What is asset damage?

Asset damage is a situation where the usefulness of the asset suddenly decreases, so it is so expensive to maintain that it can no longer expect to pay for ourselves through future cash flows. The company may decide to maintain the asset in its books, but to write value more precisely reflecting is the value, or it can state and dispose of assets. Once the asset is disrupted, it cannot be restored, and therefore companies are carefully tested with assets before their placement in this category.

There are several circumstances under which the assets can be disturbed. One is through the regulatory obsolete, where the asset was applicable, but the amendment in the regulations meant that the company could no longer use; For example, if the machine no longer has sufficient control mechanisms of pollution. Damage may also be the cause of asset damage, as well as a sudden change in technologies and market conditions. The company can buy a piece of new equipment just to find out that the standards to change the processutic quickly, that it cutsIt can no longer be used in production. The accountant determines the current value of the asset, the accounting value associated with the maintenance and repair, and the expected future cash flows created through the asset. If they are lower than the main value, the asset is disrupted and can be reduced in the company's books.

Asset damage can have advantages and disadvantages. Companies often look for ways to report the loss of tax forms to reduce responsibility, but too many losses can attract the negative attention of shareholders and other parties. The damaged asset also becomes responsible for society because it must find something in common with it. If he retains ownership, he does not have to sell it in the future, as an impairment would be an obstacle to the future buyer. For example, no one can want a machine used in an outdated process.

Some accounting companies specialize in testing asset rating and mayoffer this service to companies because they decide what to do with assets that seem to be outdated. The company can exclude or sell or sell it without necessarily decreased unless the asset is disturbed but no longer use. Excess assets may fall into this category.