Accounting information
Due to the international economic crisis, companies all over the world meet new challenges when preparing the annual financial statements for 2008. In previous years, most companies did not have this challenge as markets were good and stable. Now they have to evaluate if the market/sales value of its assets is less than the value recorded in its accounts and also to evaluate if the company is a going concern. Lithuania companies have this commitment according to Lithuanian Business Accounting Standards. Small and big companies have to follow this commitment.
Management of the company has the responsibility to prepare the annual financial statements and look after that these commitments are fulfilled.
LITHUANIAN BUSINESS ACCOUNTING STANDARD No 23 (IAS 36)
IMPAIRMENT OF ASSETS
The purpose of the standard is to determine the principals, how to evaluate, register in the books and present in the financial statements the impairment of fixed assets (loss because of the decrease of the value).
The standard is applied in order to determine indications (“symptoms”) of impairment and present assets in the financial statements at the value, which is not higher than the recoverable amount (net realization value or the net present value of the future cash flows from the assets).
If the book value of the assets is higher than the recoverable amount, the assets are impaired. If the difference is material, the book value of the assets has to be reduced up to the recoverable value.
Making the financial statements, the Company has to assess, if there are any indications of impairment, showing material devaluation, and, if any of the indications is present, the company has to estimate the recoverable value of the assets and compare it with the book value.
See full standart.
