IAS 36

IAS 36


Compare Carrying Amount (Calc IAS16) > Recoverable Amount = Impairment Loss (p/l OR COS OR Rev deficit)

At END of Reporting Period:

  1. Test indications (annually)
    • Intangible asset with indefinite useful life
    • Intangible asset not yet available for use
    • Goodwill acquired
  2. if indications apply cal Recoverable Amount



  • Assets value ↓ more than usual
  • Changes in market, tech, economy eg Competitor stealing market
  • Market Interest Rates/ Other Market Rates ↑ affect discount rate*-value in use
  • CA of net assets > Market Capitalism


  • Evidence of obsolescence/damage
  • Asset is planned to become idle, discontinue, restructure operation, dispose A before expected date
  • Evidence that economic performance will be worse than estimated

Indications Apply: Cal RA as HIGHER OF:

  1. Fair value (given) – Cost to sell (location + condition)

Cost to sell examples: legal costs, stamp duty, dismantling cost

  1. Value in use F Cashflow – P Cashflow excl finance cost & tax

NB After you have the impairment loss there may be a change in estimate

  • Can be eg useful life, dep method, rate
  • Change Applies from FUTURE periods.
  • Therefore if you change in March 2014 – use old dep for rest of 2014…get impairment loss nd CA then:
  • 2015 calc dep on new estimate: DEP = new CA – new Residual    NB if u hav an impairment loss

Remaining UL                              the CA new

Reversal: ( other comprehensive income ( Rev Surplus)/ other income)

  • Must hav had a previous impairment loss & LIMITED by it
  • Impairment on goodwill CANNOT be reversed
  • Impairment no longer exists / may have decreased
  • For above to occur there must have been an estimate that changed
  • Changed: fvC2S to value in use, for Value in use… disc/ cash flow change, fv- change in cost/fv
  • Assess indications:
    • External opposite to above
    • Internal : costs incurred to improve/enhance A + restructure the operation
      • Economic performance expected to be better