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ACCA Applied Skills · Financial Reporting · Impairment of assets

Which of the following assets must be tested for impairment at least annually, regardless of whether any indication of impairment exists, under IAS 36?

An intangible asset with an indefinite useful life must be tested for impairment every year, whether or not there are indicators. Ordinary property, plant and equipment is tested only when indicators exist, and inventory and fair-valued investment property are outside IAS 36.

  1. AProperty, plant and equipment carried at cost less depreciation
  2. BAn intangible asset with an indefinite useful lifeCorrect
  3. CInventory valued at the lower of cost and net realisable value
  4. DA building held as an investment property measured at fair value

Explanation

IAS 36 requires annual impairment testing of goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use. Ordinary PPE is tested only when indicators exist. Inventory and fair-valued investment property fall under other standards (IAS 2 and IAS 40) and are outside IAS 36's scope.

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