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IAS 36 Impairment of Assets

IAS 36 Impairment of Assets prescribes the procedures to apply to ensure assets are carried at no more than their recoverable amount. Revised March 2004. Effective 31 March 2004.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.


Assets should be assessed for impairment at the end of each reporting period. If there are indications of impairment, an impairment test should be carried out. Regardless of whether there are indications of impairment, such a test must be carried out for:

  • An intangible asset with an indefinite life or not yet available for use
  • Goodwill acquired in a business combination.

Where the carrying value of an asset exceeds its recoverable amount, an impairment loss is recognised to reduce carrying value to recoverable amount.

Where it is impossible to calculate the recoverable amount of individual assets, cash generating units should instead be tested for impairment. These are the smallest identifiable groups of assets that generate cash independently of other assets.

Any impairment loss should be recognised in profit or loss except to the extent that it reverses a previous revaluation gain on the same asset.

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*Not EU endorsed as at 7 June 2017. Read more on EU Endorsement.

The following interpretation refers to IAS 36

Current proposals

  1. ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value was issued in September 2014. It proposed to amend IAS 36 to require the fair value less cost of disposal of investments in a subsidiary, associate or joint venture that is quoted in an active market to be determined on the basis of the quoted prices without adjustment. The IASB decided to incorporate work on this project into the post-implementation review of IFRS 13; a Request for Information was issued in May 2017.

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore, in order to achieve compliance with the Companies Act and related Regulations, IAS 36 guidance prohibiting the reversal of an impairment loss in respect of goodwill is amended to allow the reversal of impairment loss if and only if the reasons for the impairment loss have ceased to apply. This amendment to IAS 36 applies only to accounting periods that begin before 1 January 2016.

Disclosure exemptions

FRS 101 paragraph 8(l) states that a qualifying entity is exempt from most of the disclosure requirements of IAS 36 in relation to cash generating units which contain goodwill or an intangible asset with an indefinite useful life. The exemption particularly applies to the disclosure of assumptions, the effect of changes in assumptions and valuation techniques.

Equivalent disclosures must, however, be made in the consolidated financial statements of the group in which the entity is consolidated.

IAS 36 paragraphs for which exemption is available: 134(d)-(f) and 135(c)-(e).

An amendment to FRS 101 as a result of the 2013/2014 review cycle also exempted entities from applying IAS 36 paragraphs 130 (f)(ii) – (iii) provided that equivalent disclosures are made in the consolidated financial statements. The relevant disclosures relate to recoverable amount when established as fair value less costs of disposal.

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This page was last updated 7 June 2017