Impairment Testing and Indicators Assessment

Overview: Impairment testing is an essential activity that businesses should perform at each financial year or when there is any indication of impairment. Volatility in market conditions, unforeseen circumstances, amongst other factors, makes it necessary for businesses to ensure that their assets are not carried in their books at a value higher than would obtain from continual use or sales of such assets. IFRS requires that an entity make, at each reporting date, impairment testing of its long-lived assets whenever there are indicators of impairment, and at least annually for intangible assets with indefinite useful life, intangible assets not yet available for use, and assets for which goodwill has been assigned.
Our Approach: Assessing potential impairment indicators, in deciding on impairment testing could be very complex, requiring sound judgement and technical expertise.  At BVS, we have a dedicated Advisory team for Impairment Testing and Indicators Assessment known as the Impairment Test Advisory Team (ITAT) engaged in providing lasting support to businesses on impairment.
At BVS, we have developed a robust and effective model for Impairment Testing of assets or/and cash generating units (CGUs) – a group of assets that generate cash inflow independent of other assets.  Elements from IAS 36 – Impairment of Assets such as fair value less cost to sell, value in use, carrying amount, recoverable amount, crucial to impairment testing are factored into our model in impairment testing of CGU/Assets.
Quality of our service: From proper allocation of goodwill and assets to CGUs to reversal of impairment losses, we adopt a strategic project approach in delivering success on our impairment assessment services.