What Are The Disclosure Requirements For Impairments? – FAQ | IFRS

What are the disclosure requirements for impairments?

Impairments relate to the (potential) impairment of:

  • general (non-)current assets with many exceptions with similar rules in separate standards (mentioned separately hereafter) (IAS 36) – among others, PPE, Investment property at cost, Intangible assets, Goodwill, Investments in subsidiaries, associates and joint ventures at cost, Right-of-use assets at cost (lessee), Cash-generating units,  Exploration and evaluation assets (mineral resources),
  • financial assets (IFRS 9) – Financial assets at amortised cost, Financial assets at fair value through other comprehensive income, Contract assets, Receivable assets, Loans and receivables, Net investment in a lease/Underlying asset (lessor), Some loan commitments (at cost),
  • Inventories (IAS 2),
  • Incremental costs of obtaining a contract and costs to fulfil a contract (IFRS 15),
  • Deferred tax assets (IAS 12),
  • Plan assets and other receivables in employee benefits (IAS 19),
  • Insurance contract assets (IFRS 17),

and the primary goal is to ensure that an entity’s assets are not carried at more than their recoverable amount (i.e. the higher of carrying value and one of the fair value basis of each above mentioned assets, for example value in use from IAS 36). With the exception of goodwill and certain intangible assets for which an annual impairment test is required, entities are required to conduct impairment tests where there is an indication of impairment of an asset, and the test may be conducted for a ‘cash-generating unit’ where an asset does not generate cash inflows that are largely independent of those from other assets.

The disclosure requirements are listed by class of assets, reportable segments, and other disclosures.Disclosure impairment

Disclosure by class of assets:

  • impairment losses recognised in profit or loss;
  • impairment losses reversed in profit or loss;
  • which line item(s) of the statement of comprehensive income; and
  • impairment losses on revalued assets recognised in other comprehensive income
  • impairment losses on revalued assets reversed in other comprehensive income.

Disclosure by reportable segment:
(for entities that present operating segment information)

  • impairment losses recognised; and What are the disclosure requirements for impairments?
  • impairment losses reversed. What are the disclosure requirements for impairments?

Other disclosures:

If an individual impairment loss (reversal) is material disclose:

  • events and circumstances resulting in the impairment loss;
  • amount of the impairment loss or reversalWhat are the disclosure requirements for impairments?
  • individual asset: nature and segment to which it relates;
  • cash generating unit: description, amount of impairment loss (reversal) by class of assets and segment;
  • if the recoverable amount is fair value less costs of disposal, the level of the fair value hierarchy (from IFRS 13 Fair Value Measurement) within which the fair value measurement is categorised, the valuation techniques used to measure fair value less costs of disposal and the key assumptions used in the measurement of fair value measurements categorised within ‘Level 2’ and ‘Level 3’ of the fair value hierarchy; and
  • if recoverable amount has been determined on the basis of value in use, or on the basis of fair value less costs of disposal using a present value technique*, disclose the discount rate.

If impairment losses recognised (reversed) are material in aggregate to the financial statements as a whole, disclose:

  • main classes of assets affected main events and circumstances; and
  • detailed information about the estimates used to measure recoverable amounts of cash generating units containing goodwill or intangible assets with indefinite useful lives.

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