Ensuring Impairments are not Based on Prorated Asset NBV - Support Advisory

Issue

Impairments are based on prorated asset Net Book Value when not recorded on first of the month.

Recommended Solution

Impairments are based on prorated asset Net Book Value at the end of the day before, when not recorded on first of the month. That is usually not the intended result, because conventionally an asset is assessed for impairment using the NBV at the end (or beginning) of a fiscal month as the baseline. To this end, always record the impairment effective the first day of the fiscal month in which the impairment needs to be recognized. Use the prior month-end NBV as the baseline.