This article applies to Microsoft Dynamics AX for the Japan (jp) region.
This article describes a country-specific update that supports the impairment accounting in Japan in Microsoft Dynamics AX 2012 R2.
Fixed assets may be susceptible to impairment (decline) of their value, which may be caused by factors such as poor management, new competition, and technological innovations. Impairment losses are stated in a profit-and-loss account. The impairment value is measured by comparing the value of the fixed asset or income-generating unit with its recoverable amount. The recoverable amount is the highest value that can be obtained from selling the fixed asset or income generated from the operation of the fixed asset.
In Japan, impairment of fixed assets is conducted in accordance with No. 6 of Japan GAAP application guidance, where a 2 step method is used. Step 1 is a recognition test of impairment loss, and step 2 is measurement of the impairment loss. Future cash flow that is not discounted is used as a standard against which the carrying amount (or net book value, NBV) is compared. If this future cash flow is not enough to cover the net book value of the asset, then the impairment measurement is required to recognize the journal amount. In step 2 of measuring the amount, the recoverable amount (which is either the value in use or the market value of the asset, whichever is higher) is subtracted from the net book value of the fixed asset to calculate the impairment amount. After impairment, the recoverable amount will be the new net book value of the fixed asset for future depreciation calculation.
Managing impairment indicators
Visibility of impairment history and transactions
Impairment with the 2 step method
Depreciation calculations after impairment
This country-specific update is included in Cumulative Update 7 (CU7) for Microsoft Dynamics AX 2012 R2. To apply this country-specific update, install CU7 for Microsoft Dynamics AX 2012 R2. For more information about CU7 for Microsoft Dynamics AX 2012 R2, click the following article number to view the article in the Microsoft Knowledge Base:
2885603 Cumulative Update 7 for Microsoft Dynamics AX 2012 R2