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IFRS and US GAAP, with Website: A Comprehensive Comparison by Steven E. Shamrock

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14

IMPAIRMENTS

This chapter covers impairment of property plant, and equipment (PP&E), goodwill, and other intangible assets. Impairment of financial assets and inventory are covered in the respective chapters.

Both IFRS and US GAAP require impairment of assets when their value has diminished. However, there are fundamental differences with regard to recognition, measurement, and subsequent measurement.

IMPAIRMENT TRIGGERS AND TIMING

Both IFRS and US GAAP require that goodwill and indefinite-lived intangible assets be tested for impairment annually at the same time each year. For PP&E and definite-lived intangibles, impairment is assessed only after triggers are identified. The triggers are very similar under both standards. The underlying concept of impairment triggers are conditions and evidence that strongly indicate that the future cash flows will be significantly less than originally planned. Both standards require assessment of triggers for internal and external factors such as changes in focus of the entity, operation issues, adverse changes in the market for an entity’s products, and changes in interest rates.

IFRS describes the minimum indications that shall be considered; US GAAP gives examples.

IAS 36

12 In assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications:

External sources of information

(a) During the period, an asset’s market value has declined significantly more than would be ...

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