IAS 36 - Impairment

• Impairment


  An asset is impaired if its recoverable amount is below asset's current carrying amount
• Recoverable amount


  The higher of fair value less costs to sell (net realisable value) and value in use
• Impairment review


  1. Assess whether there are indications of impairment

  2. If indicator of impairment exists, perform impairment review

  3. If no indication of impairment, no further action needed
• Assets requiring annual impairment reviews

  • Goodwill acquired in a business combination
  • An intangible asset with an indefinite useful life
  • An intangible asset not yet available for use
• Fair value less cost to sell

  • Fair Value - current market value
  • Cost to sell - legal costs, stamp duty and the cost of removing the asset. Exclude restructuring or reorganisation expenses.
• Value in use


  Determined by estimating future cash inflows and outflows to be derived from the use of the asset and its ultimate disposal, and applying a suitable discount rate to these cash flows. Cash flows relating to financing activities or income taxes should not be included.
• The end