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Impairment of assets according to IAS 36

In order to ensure that the annual financial statements give a true and fair view of the company’s situation fixed assets must be regularly tested for impairment.

This paper examines the whole procedure of the impairment of assets according to IAS 36. Beginning with the test for certain indications that could point to impairment, followed by specifically calculating the recoverable amount using a discounted cash flow analysis and possibly reversing the impairment loss in later accounting periods. The special focus is on the cash generating units and the impairment of goodwill.

Contents of this white paper

  1. Introduction and area of application
  2. Impairment of assets according to IAS
    • 2.1 When does an impairment exist?
    • 2.2 Process
    • 2.3 Identifying indications of an impairment
    • 2.4 Determining the recoverable amount
      • 2.4.1 Single asset or cash-generating unit?
      • 2.4.2 Fair value less costs of disposal
      • 2.4.3 Calculating the value in use
    • 2.5 Recording the impairment loss in the balance sheet and P&L
    • 2.6 Cash-generating units and impairment of goodwill
    • 2.7 Reversing an impairment loss
  3. Summary
  4. Bibliography
Impairment of assets according to IAS 36

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