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Impairment Test is performed in an entity when it realizes the need as the carrying amount of the assets is more than the fair value of the assets. This impairment test is done to ensure that whether the assets of the organization are not overstated, and the assets don’t include any irrecoverable amount or value. If the fair value of the assets is less than their book value, the assets will be recognized at fair value and the curtailment in the book value is the impairment loss. This impairment loss is accounted immediately in the statement of Profit and Loss.
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