IAS 36 Impairment of Assets

Question 1

Frequency of Impairment

Answer 1

1. Annually test asset for impairment

2. More frequent within a year if there is indication of impairment loss

Question 2

Circumstances indicating impairment test is needed

Answer 2

1. Reduction in market value
2. Significant adverse change in business or market
3. Poor economic performance - frequent breakdown
4. Physical damage
5. Change of discounting rate in calculation of value in use

Question 3

Definition of IAS 36

Answer 3

States that whenever there is a trigger for impairment losses, an impairment review must be conducted and when RA is lower than CA, an impairment loss shall be recognized.

Question 4

How impairment review is done?

Answer 4

The test of impairment review shall be either individual asset or group of assets qualifying as CGU.

CGU refers to the smallest group of assets and liabilities capable of generating independent net cash inflows.