How are write downs documented on financial statements ?

Question

I'm curious how write downs are shown on financial statements. I've read they can be listed as expenses on income statements, resulting in a reduction of net income.

However, I've also read the "asset" can be reduced on a balance sheet. If the "asset" is reduced, how would the liability portion be adjusted also ?

Answer 1

It depends on what assets you have in mind. Impairment losses on goodwill and intangible assets are taken to the income statement.

Investments designated as FVTPL investments (Fair Value Through Profit and loss) are remeasured at fair value with any resultant gains and losses taken to the income statement.

Investments designated as AFS investments (Available For Sale) are remeasured at fair value with any resultant gains and losses taken to "Fair Value Reserve" within equity (NOT to income statement).