Principles of impairment and impairment indicators

In this lesson

1. 0:00 Impairment of assets overview
2. 0:36 Core principle and recoverable amount
3. 2:16 Fair value less costs versus value in use
4. 3:39 Calculating recoverable amount worked example
5. 7:04 Impairment indicators and testing requirements
6. 9:41 Annual impairment testing for specific assets

About this lesson

This lesson covers what impairment is, how to identify when testing is needed through impairment indicators, and how to calculate impairment losses by comparing carrying amounts to recoverable amounts (the higher of fair value less disposal costs and value in use). You'll see worked examples showing how to determine whether assets are impaired and understand the key distinction between assets that require annual impairment testing—goodwill, indefinite-life intangibles, and incomplete intangible assets—and those tested only when indicators suggest impairment risk. This is essential knowledge for Financial Reporting (FR), Strategic Business Reporting (SBR), and Advanced Financial Reporting (F2), where impairment calculations appear regularly in both objective tests and case studies. Understanding when and how to apply impairment rules helps you handle asset valuations accurately and demonstrates the technical precision examiners expect in your answers.

Duration: 10m