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Summary IAS36 Impairment of Assets
This document contains a short, efficient summary of the IAS36 standard as well as class examples dealt with.
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IAS 36 Impairment of AssetsAlso see notes from FRK200.
Part A: Individual Assets
Recognition of impairment:
When should asset be assessed for impairment?
- Qualifying assets must be assessed at end of RP only if there is
indicator of impairment.
- IAS38 Intangible assets
MUST be done ANNUALLY even if no indicator or impairment
exists if it is the following:
o IA with indefinite UL
o IA not yet available for use
Requirements (all to be met):
1. Done annually
2. At the same time each year
3. Before end of reporting date
Measurement of impairment loss
When is an asset impaired?
When CA > RA.
RA = higher of
- Value in Use
- FV – costs of disposal
, How is RA for Intangible Asset with indefinite UL measured?
Can use recent RA calculation if all requirements are met?
1. IA is part of cash generating unit
2. in prev yr it showed that RA > CA
3. unlikely that RA < CA
RA calculation = net cash inflow / discount rate
What if the value in use cannot be determined?
This can be due to some individual assets not generating future cash
flows that are largely independent.
The entity may only calculate the FV – cost of disposal in the
following circumstances.
a. individual asset is held for disposal
b. FV – Costs of disposal is greater than Asset’s CA. (in this case no
impairment would be needed)
However, if the individual asset is not held for disposal or the FV –
cost of disposal is < CA, then the recoverable amount is determined
for the cash generating unit (see part B).
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