An asset is written down in value if and only if the recoverable amount identified is lower of the assets carrying value recognized within the books. On the basis of the test for an impairment you’ve identified the assets recoverable amount (as mentioned earlier it’s highest of either the ‘value in use’ or ‘fair value less costs to sell’) and now you compare it against the assets carrying amount. Provided the latter is the lower amount, you recognize an impairment charge in the amount that’s the difference between recoverable amount and the carrying value.
Once you’ve compared those two and identified there’s impairment, the loss is recognized immediately within your income statement (usually under ‘other expenses’). Note here that if you’re applying a revaluation model, this loss is treated as a revaluation decrease through revaluation items within your equity.
Now that the asset is written down in value, you should also consider changing its depreciation. The depreciation charge is to be adjusted prospectively to reflect the remaining useful life of the asset and its new value depreciating. For an example if the assets new carrying amount is 1,000 CU (instead of the old one at 2,500 CU) and the remaining useful life is 5 years (instead of the previous period of 10 years), its annual depreciation charge would be 200 CU (the old charge was 250 CU). Provided the period remains the same in our example, the charge is then 1,000 CU divided by 10 years, so a 100 CU.