Impairment
Impairment is a reduction in an asset’s carrying amount when the applicable recoverability test shows that the amount cannot be supported. For assets within IAS 36, compare carrying amount with recoverable amount, the higher of value in use and fair value less costs of disposal. This is distinct from planned depreciation or amortisation. Other assets, such as inventory, use their own measurement rules rather than automatically applying IAS 36.
Worked example
An asset has carrying amount $20,000. Its value in use is $15,000 and fair value less disposal costs is $17,000. Recoverable amount is $17,000, so the impairment loss is $3,000.
Common mistake
The detailed IAS 36 calculation is background for FA, not an assertion that all impairment requirements are examinable. FA’s basic goodwill calculation explicitly excludes goodwill impairment.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Supporting | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| CIMA | F1 | Direct | Official assessment-window verification pending |
| FIA | FFA | Supporting | September 2026–June 2027 |
Related terms
Also called: impairment loss