In this episode, I explain the basics of IAS 36 impairment. We start with the key idea: an asset is impaired when its carrying value is more than its recoverable amount. I’ll talk you through the terminology, the logic, and the numbers, so it starts to feel manageable rather than messy.

You’ll learn how to calculate an impairment loss, how to account for it, and what happens when the asset has previously been revalued. We also look at reversals of impairment losses and one phrase I never want to see in an exam answer: “impairment gain”. Let’s face it, impairment gets examined, so let’s make sure you can pick up the marks.

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Chapters:

(00:00) IAS 36 impairment basics

(01:21) When an asset is impaired

(01:36) Recoverable amount: fair value vs value in use

(03:32) Judgement and estimates in value in use

(05:20) Calculating and recording an impairment loss

(06:30) When to perform an impairment review

(08:03) Links to IFRS 18, IAS 7 and IAS 12

(12:03) Why IFRS 9 financial assets are different

(12:33) No such thing as an impairment gain

(13:44) Impairment of revalued assets

(16:01) Reversal of impairment losses

(17:01) Worked examples and exam technique