Applying IAS 36 Impairment of Assets
This factsheet provides a summary of the basic principles of accounting for impairments and practical tips on application.
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- 2023 Issued Standard – IAS 36
The 2023 Issued Standards include all amendments issued up to and including 1 January 2023.
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Summary
Assets should be assessed for impairment at the end of each reporting period. If there are indications of impairment, an impairment test should be carried out. Regardless of whether there are indications of impairment, such a test must be carried out for:
- An intangible asset with an indefinite life or not yet available for use
- Goodwill acquired in a business combination.
Where the carrying value of an asset exceeds its recoverable amount, an impairment loss is recognised to reduce carrying value to recoverable amount.
Where it is impossible to calculate the recoverable amount of individual assets, cash generating units should instead be tested for impairment. These are the smallest identifiable groups of assets that generate cash independently of other assets.
Any impairment loss should be recognised in profit or loss except to the extent that it reverses a previous revaluation gain on the same asset.
Current proposals
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Business Combination – Disclosures, Goodwill and Impairment
As a result of the post-implementation review of IFRS 3 the IASB has initiated a project to consider whether amendments should be made to IFRS 3 and IAS 36 to:
- Improve disclosures about acquired businesses, and
- Simplify accounting for goodwill
- Improve aspects of the impairment test for goodwill.
A discussion paper DP/2020/1 Business Combinations – Disclosures, Goodwill and Impairment was published in March 2020.
An Exposure Draft IASB/ED/2024/1 Business Combinations – Disclosures, Goodwill and Impairment was published in March 2024.
Recent amendments
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Related IFRIC interpretations
UK reduced disclosures – FRS 101
UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page gives more information on which entities qualify and the criteria to be met.
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These resources are available exclusively to Corporate Reporting Faculty subscribers, ICAEW members and students.
ICAEW factsheets and guides
The Corporate Reporting Faculty's annual IFRS factsheets provide a more detailed discussion of recent IFRS amendments.
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