.. (1) Impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount Thus, Impairment loss = Carried amount - Recoverable amount* = Rs. 500 lakhs - Rs. 400 lakhs = Rs. 100 lakhs *Recoverable amount is higher of assets net selling prices. 375 lakhs and its value in use Rs. 400 lakhs. ..Recoverable amount = Rs. 400 lakhs. (in) JOURNAL ENTRIES Particulars Dr. Cr. Amount Amount Rs. in lakhs Rs.in lakhs Impairment loss account To Asset account (Being the entry for accounting impairment loss) Profit and loss account 100 To Impairment loss account 100 (Being the entry to transfer impairment loss to profit and loss account) (1) Dr. 100 100 (ii) Dr. (iii) BALANCE SHEET OF VENUS LTD. AS ON 31.3.2005 936 Asset less depreciation Less: Impairment loss Rs.in lakhs 500 100 400 1.27 Accountants of Poornima Ltd. show a net profit of Rs. 7,20,000 for the third quarter of 2005 after incorporating the following: () Bad debts of Rs. 40,000 incurred during the quarter. 50% of the bad debts have been deferred to the next quarter. (1) Extra ordinary loss of Rs. 35,000 incurred during the quarter has been fully recognized in this quarter. (iii) Additional depreciation of Rs. 45,000 resulting from the change in the method of charge of depreciation. Ascertain the correct quarterly income