Page 11 - 2018 Finac1 Test 3 Class Slides - 3. Impairment Of Assets

TEST 3 PREPARATION

When does impairment take place?

• An asset is impaired when the carrying amount of the asset
exceeds its recoverable amount.

• An entity should assess at the end of each reporting period
whether or not there is any indication that an asset may be

impaired.

• If any such indication exists, the entity should estimate the
recoverable amount of the asset. (IAS 36.08–09)

• If there is no indication of a potential impairment loss then

the statement does not require an entity to make a formal
estimate of the recoverable amount.

• Irrespective of whether there is any indication of
impairment, an entity shall also:

• test an intangible asset with an indefinite useful life or intangible
asset not yet available for use for impairment annually by
comparing its carrying amount with its recoverable amount;
• test goodwill acquired in a business combination for impairment
annually.

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