IAS 36 Explained Simply | Impairment Test, Recoverable Amount, CGU & Reversal

Learn IAS 36 – Impairment of Assets in a clear, exam-focused way. This lecture covers impairment indicators, recoverable amount, fair value less costs of disposal, value in use, cash-generating units (CGUs), goodwill allocation, impairment loss, and reversal rules with practical examples and journal entries.

✅ What you’ll learn

When impairment testing is required (internal & external indicators)

How to calculate Recoverable Amount

FVLCD vs Value in Use (VIU) and how VIU is computed

CGU identification + allocation of impairment loss (including goodwill)

Journal entries + disclosure summary

When impairment losses can be reversed (and when they cannot)

📌 Chapters
Introduction to IAS 36
Scope & key definitions
Impairment indicators (external + internal)
Recoverable amount overview
Fair Value Less Costs of Disposal (FVLCD)
Value in Use (VIU) – steps & discounting
Measuring impairment loss (single asset)
CGU concept + identifying CGUs
Goodwill and impairment testing
Allocating impairment loss within CGU
Reversal of impairment – rules & limits
Key disclosures + exam tips
Quick recap

📌 Exam Tip: Always start with Indicators → Recoverable Amount → Compare with Carrying Amount → Impairment Loss → Allocate (if CGU) → Journal Entries → Disclosure.

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