• IMPAIRMENT OF ASSETS: A GUIDE TO APPLYING
IAS 36 IN PRACTICE.
• PUBLISHED IN MARCH 2014.

Explanation of the basis of key assumptions and the valuation approach used to determine the recoverable amount (IAS
36.132(encouraged), 134(d)(i)-(v),
(e)(i)-(v), 135(d))

• Key assumptions usually left out.
• If discussed they were not sufficient.
• Key assumptions include gross margin, government bond rates, exchange rate for the period, raw material price, inflation, market share, etc. • Comparative information is required

Where goodwill or indefinite life intangibles have been allocated to a CGU (or group of CGUs), but no impairment has been recognized, reasonably possible changes in assumptions if such changes would cause the unit’s carrying amount to exceed its recoverable amount
(IAS 36.134(f), IAS 36.135(e))

• Sensitivity Analysis is not provided.
• If provided, it is not consistent.
• If book value increases, investors would expect a clear sensitivity analysis. • sensitivity analysis should incorporate all key assumptions
(beyond discount rate and growth rate) .

Description of the entity’s CGU when it recognises or reverses an impairment loss for the CGU during the period (IAS 36.130(d)(i))

• Disclosures did not provide description. • If they did, they lacked substance.
• Users did not have an idea of the impact of the impairment on the financial activities.

Explanation of the events and circumstances that contributed to the impairment loss or reversal
(IAS 36.130(a))

• Disclosures were too broad and
• Did not provide causes of the events and circumstances that led to impairment.

• Revised by IASB on March 31, 2004.
• Goodwill to be tested annually or frequently, depending on circumstances. • Information concerned with calculation of recoverable amount.

• To require disclosures for information of each CGU

• To prohibit reversal of impairment losses