Assessing Impairment of Assets

Entities should perform an impairment review when certain impairment indicators are present and would indicate that the carrying amount of such asset may not be recoverable. The indicators that the companies consider important which could trigger an impairment review include the following:

  1. Significant underperformance relative to the expected historical or projected future operating results; 
  2. Significant changes in the manner of use of the acquired assets or the strategy for overall business;
  3. Significant negative industry or economic trends. 

When the higher recoverable amount of such asset is the value in use, it is required to make estimates and assumptions that can materially affect the financial statements in determining the present value of future cash flows expected to be generated from the continued use of such asset. 


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