ias-impairment

name

ias-impairment

description

Impairment of non-financial assets under IAS 36 (full IFRS) and Section 27 (IFRS for SMEs). Indicator-based testing, recoverable amount (higher of fair value less costs of disposal and value in use), cash-generating units, goodwill impairment, reversal. Use when material PPE, intangibles, goodwill, or investment property carrying amounts could be impaired. Tier-3 scope — indicator-based reference built first; full annual-test machinery deferred until a goodwill-heavy or asset-intensive client demands it.

Impairment of Assets (IAS 36 / Section 27)

Tier-3 scope

For typical SME clients, impairment is indicator-driven and assessed annually as part of close. The full IAS 36 machinery (annual mandatory test of goodwill, cash-generating unit determination, value-in-use cash-flow projections with discount rates) becomes load-bearing for asset-intensive or M&A-active clients. Build the indicator-based assessment first; build full machinery when required.

Required first reads

• doctrine/accounting-finance-doctrine.md
• doctrine/references/ifrs-for-smes-default.md (Section 27)
• doctrine/references/full-ifrs-overlay.md (IAS 36)
• doctrine/references/chart-of-accounts.md

Indicators

External:

• Significant decline in market value beyond normal use.
• Significant adverse changes in technology, market, economy, legal environment.
• Increase in market interest rates affecting discount rates.
• Carrying amount > market capitalisation (listed entities).

Internal:

• Obsolescence or physical damage.
• Plans to discontinue, restructure, or dispose of an asset.
• Worse-than-expected economic performance.

Recoverable amount

= higher of:

• Fair value less costs of disposal.
• Value in use (PV of future cash flows from the asset / CGU).

Carrying amount > recoverable amount → impairment loss

Recognised in P&L (or against revaluation surplus where applicable).

Reversal

Section 27 / IAS 36 allow reversal of prior impairment (other than goodwill) up to the original carrying amount less subsequent depreciation, if indicators reverse.

Goodwill impairment is not reversed under either framework.

Goodwill specifics

• Section 19 (IFRS for SMEs): goodwill amortised over useful life (max 10 years if useful life cannot be reliably estimated). Impairment tested on indicators.
• IFRS 3 (full IFRS): goodwill not amortised; tested for impairment annually.

Build implications

• Indicator-assessment checklist run at each reporting date.
• Where indicator triggers, the system supports a workpaper for recoverable-amount calculation.
• Impairment journal posted via the posting service.
• Reversal journal where conditions met; goodwill impairments locked from reversal.
• Disclosure note generator.

CoA implications

Code	Name
1799 Accumulated Impairment — PPE	Non-current contra.
1899 Accumulated Impairment — Intangibles	Non-current contra.
6750 Impairment Loss — PPE	P&L.
6760 Impairment Loss — Intangibles / Goodwill	P&L.
6770 Reversal of Impairment Loss	P&L (gain).

Forbidden patterns

• Reversal of goodwill impairment (blocker).
• Carrying amount > recoverable amount left unrecognised when indicator confirmed (blocker).
• Annual goodwill impairment test claimed under IFRS for SMEs (mis-application of frameworks).
• Discount rate hardcoded (use entity / asset-specific rate).

Files

• SKILL.md.
• references/indicator-checklist.md.
• references/value-in-use-workpaper-template.md (build when first needed).

Last reviewed: 2026-05-12. Next review due: 2026-11-12.

Prerequisites

• Load doctrine/accounting-finance-doctrine.md before applying this skill.
• Load governance/finance-accounting-quality-gate.md when the output is a release, client artefact, SRS, SDS, proposal, business plan, or implementation plan.
• Use doctrine/source-register/ for final statutory, tax, payroll, FX, EFRIS, eTIMS, or authority-template values.

Inputs

Artifact	Produced by	Required?	Validation
Finance context map	finance-module-audit	Required	Entity, framework, jurisdiction, modules, users, and deployment context are named.
Doctrine baseline	Doctrine owner	Required	Doctrine version and reporting framework are stated.
Source-register snapshot	tax-statutory-source-register-and-country-packs	Required for final statutory output	Entries are verified-current or reviewer-approved verified-with-caveat.
Ledger/posting context	ledger-posting-engine-core	Required when postings are affected	Posting boundary, CoA mappings, control accounts, dimensions, and period state are known.

Outputs

Artifact	Consumed by	Acceptance evidence
Skill-specific decision record	Implementer, reviewer, quality gate	Scope, assumptions, chosen treatment, rejected alternatives, and caveats are recorded.
Implementation or workflow contract	Software, SRS, SDS, proposal, or business-plan engine	Contract names inputs, outputs, controls, evidence, and failure conditions.
Acceptance evidence	Finance quality gate	Tests, fixtures, examples, source links, reviewer sign-off, or evidence-pack references are present.
Plain-language explanation	Client, owner, manager, operator	Business meaning is stated before technical accounting treatment where client-facing.

Decision Rules

• Prefer IFRS for SMEs for typical SME entities unless full IFRS, local law, donor requirements, or client policy requires otherwise.
• Treat every money-touching workflow as ledger, control, reconciliation, evidence, and reporting scope.
• Do not finalize statutory values without source-register support and reviewer status.
• Use business-language output for operators and accountant-language output for ledger, reporting, and audit users.
• Escalate uncertain framework, tax, or statutory interpretations to the required reviewer role instead of presenting them as final.

Acceptance Evidence

• Inputs and outputs above are present or explicitly marked not applicable.
• Relevant quality-gate blockers have been checked and no blocker remains unresolved.
• Examples or fixtures cover at least one happy path and one failure or caveat path for this skill's domain.
• Reviewer role, review date, and open caveats are recorded for release-grade artefacts.

Anti-Patterns

• Treating draft planning assumptions as final statutory or accounting facts.
• Hiding tax, payroll, FX, or authority-template caveats in prose instead of source-register state.
• Producing technically correct accounting output without a plain-language layer for non-accountant users.
• Closing a remediation or implementation item without observable evidence.

Required References

• doctrine/accounting-finance-doctrine.md.
• governance/finance-accounting-quality-gate.md.
• docs/reference-manifest.md for declared reference states.
• Domain-specific references listed earlier in this skill.

Examples

• Include at least one normal workflow example for this skill's domain.
• Include at least one exception, rejection, reversal, stale-source, or reviewer-caveat example where the domain can fail.

Review Metadata

Last reviewed: 2026-05-15. Next review due: 2026-11-15.