Suppose you sold an asset worth Rs 80 at that value, but you had paid Rs 100 for it, you would expect to take a loss of Rs 20 in your P&L(and naturally then in your equity). Even if you decide to keep that asset with yourself, AS-28 requires you to book that same notional loss as an impairment loss, since its value is permanently eroded. But Dish TV managed to keep the asset in its subsidiary AND avoid routing the loss through P&L(though even they could not escape the balance sheet effect)
While reading the FY11 audited consolidated accounts of DishTV(India's largest DTH operator, which is still lossmaking), the italicized portion of the audit report leapt out at the page, since it was nearly 50% of the report. Intrigued, I read further and found that they had transferred non DTH assets to a subsidiary, presumably to maintain 'core' business in the holding company. Seems fine, except that the transfer was done at below book value, and the loss was taken to the General Reserve. Why did they not follow the standard route of transferring the assets at cost to maintain tax benefits? If that was done, the eventual asset writedowns would have been upstreamed to the consolidated P&L. This way, they managed to get the court approval to treat this as a merger induced one time writeoff, worthy of being routed to the balance sheet directly without passing through the P&L. Ideally and following conservative accounting practice, the asset should have been written down first before being transferred to the subsidiary at a loss. That is what AS-28 on impairment would have demanded.
So what is the impact? Rs 175 Crore of impairment loss was directly reduced from equity, without also reflecting in the consolidated loss. One can read the original audit report here(http://www.dishtv.in/Library/Images/ConsolidatedAuditedFinancialResults.pdf). For once, a Big4 auditor BSR(an Indian affiliate of KPMG) seems to have done its business well, to point it out to the investor. But I must admire the ingenuity of the DishTV Corporate Finance team. They did stumble upon a good trick to use court sanctioned merger schemes to avoid taking accounting losses, which for a loss making company is a substantial benefit irrespective of the other business merits of the decision.