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IAS 36 Impairment testing: practical issues Contents Introduction Executive summary Testing for impairment at the end of each reporting period A special impairment indicator: market capitalization

How to fill out ias 36 impairment testing

How to fill out ias 36 impairment testing?

1. Understand the concept: Before filling out the impairment testing, it is crucial to have a clear understanding of the principles and requirements set out in IAS 36. Familiarize yourself with the guidance provided in the standard.
2. Identify the need for impairment testing: Determine whether any indicators of impairment exist. These indicators may include a significant decrease in the asset's fair value, changes in market conditions, technological advancements, legal factors, or internal factors such as the portion of an asset being consumed or the asset becoming idle.
3. Determine the Cash Generating Unit (CGU): If an indicator of impairment exists, identify the appropriate CGU for which the impairment testing is required. A CGU is the smallest identifiable group of assets that generates cash inflows independently of other assets or groups of assets.
4. Estimate the recoverable amount: Determine the higher of the asset's fair value less costs to sell and its value in use. The fair value can be obtained through market valuations or independent appraisals, while the value in use is calculated based on the asset's cash-generating ability and its present value.
5. Allocate the impairment loss: If the carrying amount of the CGU exceeds its recoverable amount, allocate the impairment loss to the individual assets within the CGU. The allocation should be based on their carrying amounts and reflect the proportionate loss.

Who needs ias 36 impairment testing?

1. Entities with long-term assets: IAS 36 impairment testing is applicable to entities that hold assets with a finite useful life, such as property, plant, and equipment, intangible assets, or investments in subsidiaries.
2. Entities with indicators of impairment: Companies that identify indicators of impairment in their assets, as mentioned earlier, need to perform impairment testing in accordance with IAS 36. It ensures that the carrying amount of the assets is not overstated and reflects their recoverable amount.
3. Entities preparing financial statements: IAS 36 is a financial reporting standard that requires entities to assess and disclose impairments in their financial statements. Therefore, any entity preparing financial statements needs to comply with the requirements of IAS 36 and perform impairment testing when necessary.

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What is ias 36 impairment testing?

IAS 36 Impairment Testing is an accounting standard issued by the International Accounting Standards Board (IASB) that requires entities to assess and recognize impairments of their assets, including tangible and intangible assets, when their carrying value exceeds their recoverable amount.

Who is required to file ias 36 impairment testing?

IAS 36 Impairment Testing is required to be filed by all entities that prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS), including public and private companies.

How to fill out ias 36 impairment testing?

To fill out IAS 36 Impairment Testing, entities need to follow the guidance provided in the standard. This involves determining the recoverable amount of the assets, comparing it to their carrying value, and recognizing any impairments if the carrying value exceeds the recoverable amount.

What is the purpose of ias 36 impairment testing?

The purpose of IAS 36 Impairment Testing is to ensure that assets are carried at no more than their recoverable amount. It helps entities to recognize and account for any impairments in a timely manner, providing users of financial statements with more accurate and reliable information.

What information must be reported on ias 36 impairment testing?

IAS 36 Impairment Testing requires entities to report information about the carrying value and recoverable amount of their assets, as well as any impairments recognized during the reporting period. Additional information such as the assumptions used in determining the recoverable amount may also need to be disclosed.