ABS purchased a non$-$current asset on $1$ January $20$X$1$ at a cost of $$40,000.$ At that date, the asset had an estimated useful life of ten years. ABS does not revalue this type of asset, but accounts for it on the basis of depreciated historical cost. At $31$ December $20$X$2,$ the asset was subject to an impairment review and had a recoverable amount of $$16,000.$ At $31$ December $20$X$5,$ the circumstances which caused the original impairment to be recognised have reversed and are no longer applicable, with the result that the recoverable amount is now $$40,000.$

CV of asset on date of impairment$31$Dec $20$X$2=40000-(40,000/10*2=8000)=32,000$

Recoverable amt $=16,000,$ impairment loss$=32,000-16,000=16000($ Dr SOPl $$ Cr Asset$)$

$16,000$ depreciated over remaining useful life of $8$ years

CV as on $31$ Dec $20$X$5=16,000-(16,000/8*3=6000)=10,000$

Reversal of impairment can be done only to the extent the Cv of asset would had been had such impairment not been done

$40,000-(40,000/8*5=25000)=15,000$ would have been the CV had impairment not been done on $31$ Dec $20$X$2$

impairment reversal can be made for $15,000-10,000=5000-$ Dr Asst, Cr SOPL