Page 10 - Finac1 Test 3 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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