IFRS | Insights into IAS 36 Impairment of Assets

IAS 36 Impairment of Assets is not a new standard, and while many of its requirements are familiar, an impairment review of assets (either tangible or intangible) is frequently challenging to apply in practice. This is because IAS 36’s guidance is detailed, prescriptive and complex in some areas.

The Insights into IAS 36 series have been written to assist preparers of financial statements and those charged with the governance of reporting entities to understand the requirements set out in IAS 36, and revisit some areas where confusion has been seen in practice.

The next three publications in the Insights into IAS 36 series cover Step 4 of the impairment review, namely estimating the recoverable amount:

• Estimating recoverable amount;
• Value in use: estimating future cash inflows and outflows;
• Value in use: applying the appropriate discount rate.

The first publication covers the definitions of recoverable amount and fair value less costs of disposal (FVLCOD) and provides an overview of value in use (VIU). The second and third publications discuss estimating future cash inflows and outflows and an appropriate discount rate in VIU calculations.

The publications mentioned above follow this IFRS Adviser Alert.