Abstract

IAS 36 is the standard that deals with impairment testing of most long-term non-financial assets such as property, plant and equipment and intangible assets. Under this standard an asset is impaired if its ‘recoverable amount’ is less than its carrying amount (the amount at which it is carried in the entity’s balance sheet). Recoverable amount is the higher of value in use and fair value less costs to sell. This chapter explores the differences between the two models and describes some of the practical challenges in applying the standard.