Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 19

IMPAIRMENT OF ASSETS (IAS 36)

1. OBJECTIVE

1.1 This Standard ensures that assets are carried at an amount not in excess of their recoverable amount. It also provides guidelines on the calculation of the recoverable amount.

2. SYNOPSIS OF THE STANDARD

This section summarizes this Standard, which prescribes the procedures that an entity should apply to ensure that assets are carried at no more than their recoverable amount.

2.1 Under this Standard, at each reporting date, an entity should review all assets covered by the Standard to identify whether there are indicators that an asset may be impaired (i.e., its carrying amount may be in excess of the recoverable amount).

2.1.1 In case there is an indication that an asset may be impaired, the recoverable amount of the asset should be calculated.

2.2 The recoverable amounts of an intangible asset with an indefinite useful life, an intangible asset not yet available for use, and goodwill acquired in a business combination should be measured annually, whether there is any indication that they may be impaired or not.

2.3 In case either the fair value less costs to sell or value in use is more than the carrying amount, it is not necessary to calculate the other amount. The asset is not impaired.

2.4 In case fair value less costs to sell cannot be determined, the recoverable amount should be the value in use. For assets to be disposed of, the recoverable amount is fair value less costs to sell.

2.4.1 In the case of a binding sale ...