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IAS 36 Impairment of Assets

International Accounting Standard 36

Overview of IAS 36

  • Issued: in 1998; followed by amendments
  • Effective date: 1 January 1999
  • What it does:
    • It defines key terms such as impairment loss, recoverable amount, cash-generating unit, corporate assets, etc.
    • It also establishes procedures for identification that an asset might be impaired .
    • For intangible assets with an indefinite useful life or not yet available for use, and for goodwill, impairment tests are required.
    • IAS 36 sets rules for measuring recoverable amount being higher of asset’s or cash generating unit’s (CGU) fair value less costs to sell and its value in use.
    • IAS 36 also prescribes how to measure and recognize an impairment loss in the financial statements.
    • Cash-generating units and goodwill are separately considered with focus on identifying CGU, determination of recoverable amount and carrying amount of CGU, issues related to goodwill and corporate assets. Allocation of impairment loss for a cash generating unit is outlined.
    • IAS 36 deals also with reversals of impairment loss for individual assets as well as for CGU.
    • It prescribes a number of disclosures.
    • Appendices provide further guidance on specific issues, such as measuring value in use, etc. IASB issued also illustrative examplesthat are not part of IAS 36.

Articles about IAS 36

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