It provides more details on how to perform an impairment test and it eliminates certain alternatives, such as the option not to use discounting in measuring recoverable amount. A key issue for completion of these Standards is whether there is a robust impairment test so that intangible assets and goodwill can be amortised over their useful life, without having to require an arbitrary limit of 20 years on their useful life. Both the ASB and the IASC shared the same objective for their project and their views were common in many cases. The ASB will soon publish an FRS on Impairment of Assets that will include requirements very similar to those of IAS 36. IAS 36 is effective for accounting periods beginning on or after 1 July 1999.
Earlier application is encouraged.
IAS 36, Impairment of Assets, deals mainly with accounting for impairment of goodwill, intangible assets and property, plant and equipment. The Standard combines in one International Accounting Standard the requirements for identifying an impaired asset, measuring its recoverable amount, recognising or reversing any resulting impairment loss and disclosing information on impairment losses or reversals of impairment losses. IAS 36 includes a list of indicators of impairment to be considered at each balance sheet date. In some cases, the International Accounting Standard applicable to an asset may include requirements for additional reviews. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.