Which assets must be reviewed for impairment at least annually under IAS 36 when they have indefinite useful lives?

Which assets must be reviewed for impairment at least annually under IAS 36 when they have indefinite useful lives?

• A. Inventories (IAS 2)
• B. Intangible assets with indefinite useful life and goodwill acquired
• C. Non-current assets held for sale (IFRS 5)
• D. Investment property measured at fair value (IAS 40)

Answer: (B)

Under IAS 36, assets with indefinite useful lives must be checked for impairment at least every year because there is no finite period over which they are amortized, so their carrying amount could drift without regular testing. Goodwill acquired is a classic example and must be tested for impairment annually, since it has no finite life and is not amortized; impairment tests are required even if there are no indicators of impairment. The same annual review applies to intangible assets with indefinite useful life, as their lack of amortization makes annual recoverable amount checks essential. Other assets don’t have this mandatory annual impairment requirement for indefinite life. Inventories are reviewed for write-down to net realizable value as needed, not through a formal annual impairment test. Non-current assets held for sale are measured differently under IFRS 5, typically at the lower of carrying amount and fair value less costs to sell. Investment property under IAS 40 is measured at fair value if using the fair value model, with changes in value going to profit or loss, so IAS 36 impairment testing isn’t the normal trigger there unless the cost model is used.

Under IAS 36, assets with indefinite useful lives must be checked for impairment at least every year because there is no finite period over which they are amortized, so their carrying amount could drift without regular testing. Goodwill acquired is a classic example and must be tested for impairment annually, since it has no finite life and is not amortized; impairment tests are required even if there are no indicators of impairment. The same annual review applies to intangible assets with indefinite useful life, as their lack of amortization makes annual recoverable amount checks essential.

Other assets don’t have this mandatory annual impairment requirement for indefinite life. Inventories are reviewed for write-down to net realizable value as needed, not through a formal annual impairment test. Non-current assets held for sale are measured differently under IFRS 5, typically at the lower of carrying amount and fair value less costs to sell. Investment property under IAS 40 is measured at fair value if using the fair value model, with changes in value going to profit or loss, so IAS 36 impairment testing isn’t the normal trigger there unless the cost model is used.