IAS 36

In this lesson

1. 0:00 IAS 36 Impairment of Assets Overview
2. 0:38 Scope of IAS 36 and Asset Types Covered
3. 1:06 When to Perform Impairment Reviews
4. 1:30 External and Internal Indicators of Impairment
5. 2:38 Calculating Recoverable Amount
6. 3:56 Value in Use Calculation and Methodology
7. 5:00 Discount Rate Selection for Value in Use
8. 5:51 Recognising and Recording Impairment Losses
9. 6:36 Machinery Impairment Loss Worked Example
10. 8:23 Cash Generating Units and Goodwill Allocation
11. 11:07 Impairment Loss Allocation Within CGUs
12. 12:38 CGU Impairment Allocation Worked Example
13. 17:05 Reversing Impairment Losses
14. 18:16 Disclosure Requirements for Impairments

About this lesson

This module covers IAS 36 requirements for all non-current assets including goodwill, intangible assets, and cash-generating units—essential knowledge for Financial Reporting and Strategic Business Reporting papers. IAS 36 requires you to assess whether an asset's carrying amount exceeds its recoverable amount. Impairment occurs when this happens, and you must write off the difference immediately as a loss. The recoverable amount is determined by taking the higher of fair value less disposal costs or value in use, which involves projecting future cash flows over up to five years and discounting them at an appropriate rate. You'll learn to distinguish between external indicators of impairment (market decline, technological change, interest rate rises) and internal ones (obsolescence, physical damage, idle assets). When assets are grouped into cash-generating units—the smallest group generating independent cash flows—impairment allocation follows a strict order: goodwill is reduced first, then other assets on a pro-rata basis. You cannot reduce any asset below its fair value, value in use, or zero, which means current assets and those already at realisable value often absorb no impairment. The video walks through worked examples showing how to calculate recoverable amounts and spread impairment losses across machinery, property, patents and vehicles. You'll also explore when impairment losses can be reversed if circumstances improve, the restrictions on reversals (assets cannot exceed their original depreciated cost), and why goodwill reversals are prohibited. Finally, you'll understand the disclosure requirements: reporting material impairments, the events causing them, recoverable amounts, fair value hierarchy levels, and discount rates used—all critical for exam success and real-world financial reporting.

Duration: 19m