International Accounting Standard 36 ‘Impairment of Assets’ (IAS 36, the Standard) is not new. In fact, the Standard was first issued in 1998 and later revised in 2004 and 2008 as part of the International Accounting Standards Board’s (IASB’s) work on the business combinations project. Since then only minor consequential amendments have been made.
Although IAS 36’s requirements are familiar, impairment reviews remain challenging. The guidance is detailed, prescriptive, and complex in some areas. Implementing it involves making long-term estimates of uncertain future performance and valuing assets where observable prices are often unavailable, requiring significant professional judgment. Financial statement users, regulators, and enforcement bodies continue to raise concerns about the rigor of impairment assessments, the supportability of assumptions, and the transparency of disclosures. Given these challenges, reviewing IAS 36’s requirements and key application issues is essential.
Fortunately, Grant Thornton has gained extensive insights into the application of IAS 36. Grant Thornton International Ltd, through its IFRS team, develops general guidance that supports the Grant Thornton member firms’ commitment to high quality, consistent application of IFRS. We are pleased to share these insights by publishing ‘Impairment of Assets: A guide to applying IAS 36 in practice’ (the Guide).
The Guide has been written to assist management in understanding the requirements of IAS 36 while highlighting some common areas of confusion seen in practice. More specifically it:
