In current-cost accounting, the deprival value of an asset corresponds to the lower value between its replacement cost and its recoverable amount, which is the higher value between its net realizable value and net present value.
Impairment refers to the reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount, often due to obsolescence, damage, or market value decline.
A permanent diminution in value refers to a fall in the value of an asset that is unlikely to be reversed over time. This reduction must be reflected in the balance sheet and necessitates adjustments through the profit and loss account.
