Impairment Calculator
for General
Build the IAS 36 value-in-use model. Enter carrying amount, cash flows, pre-tax discount rate, and growth assumptions; get VIU, headroom, and a sensitivity grid ready for the file.
Impairment testing, audit-ready.
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IAS 36 impairment testing for General
Missed impairment indicators is the IAS 36 finding that recurs at every regulator and on most files we review. Not because the team didn't know IAS 36.9 — they did. The triggers (declining performance, technological obsolescence, market value drops, restructuring plans) sat in the planning meeting minutes, the management commentary, and the prior-year RNs. They never made it into a structured indicator review at year-end. By the time goodwill testing rolls around, the trigger date has slipped and the impairment is recognised in the wrong period. For goodwill and indefinite-life intangibles, IAS 36.10 makes this easier — annual testing is mandatory regardless of indicators. For everything else, it lives in the structured review or it doesn't get done.
The recoverable amount is the higher of fair value less costs of disposal (FVLCOD) and value in use (VIU), per IAS 36.18. In practice, most entities default to VIU because reliable FVLCOD data isn't available for specialised assets. VIU requires a discounted cash flow model built on management's board-approved forecasts, extended by a terminal growth rate. IAS 36.33 caps the explicit forecast period at five years unless a longer period can be justified. The discount rate must be a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the asset (IAS 36.55). Getting this wrong, even by 50 basis points, can flip an impairment result. Auditors routinely challenge discount rate calculations as part of ISA 540 procedures, and regulators have flagged insufficient discount rate documentation in inspection after inspection.
Common pitfalls span preparers and auditors alike. Management teams frequently use post-tax WACC figures without grossing up to a pre-tax equivalent, violating IAS 36.BCZ85. Cash flow projections often include restructuring costs or capital expenditure that enhances asset performance, both excluded by IAS 36.44. On the audit side, firms accept management's model without independently stress-testing key assumptions or without building their own point estimate. Sensitivity analysis under IAS 36.134(f) is another weak spot. Disclosures often state that "a reasonably possible change" in assumptions would not cause impairment, but the audit file contains no evidence of what range the auditor considered "reasonably possible."
This calculator builds a five-year (or custom period) DCF model from your inputs: carrying amount, annual cash flows, discount rate, and terminal growth rate. It computes VIU, compares it to carrying amount, and flags whether an impairment loss arises. Use it as a starting point for your own models, a sense-check against management's figures, or a training tool for junior staff who haven't built an IAS 36 model before. Pair the output with documented source data for each assumption and you have a working foundation for your impairment file.