Impairment test

Financial reporting - impairment testing - international financial reporting standards (IFRS) - IAS 36.

Impairment testing is designed to ensure that the carrying amount of an asset (or Cash Generating Unit (CGU)) in a reporting entity's balance sheet does not exceed its recoverable amount.

The recoverable amount is the higher of:

• Fair value less costs to sell the asset, and
• Value in use

If the carrying amount is greater than the recoverable amount, an impairment must be recognised.

See also

• Amortisation
• Carrying amount
• Cash-generating unit (CGU)
• Condition
• Depreciation
• Fair value
• Fixed assets
• FRS 102
• Goodwill
• IAS 2
• IAS 36
• IFRS 9
• Impaired loan
• Impairment
• Indicators of impairment
• Intangible assets
• International Financial Reporting Standards (IFRS)
• Net book value
• Net realisable value
• Recoverable amount
• Revaluation
• Value in use