Under IFRS 36 impairment, when should impairment testing be performed?

Under IFRS 36 impairment, when should impairment testing be performed?

• A. Test at the end of each reporting period
• B. Monitor annually
• C. Monitor only when impairment indicators exist
• D. Test only when fair value declines

Answer: (B)

Impairment testing timing hinges on two factors: indications of impairment and specific annual requirements. Under IFRS 36, you must test for impairment whenever there are indications that an asset may be impaired, and you must also perform an annual impairment test for assets that require it—namely goodwill and indefinite‑lived intangible assets. In practice this means you monitor assets regularly and ensure an impairment test is done at least once a year for those particular assets, even if no indicators are present. The other options aren’t correct because impairment testing isn’t mandated at the end of every reporting period for all assets, nor is it performed only when indicators exist for all assets (you still have annual testing for goodwill and indefinite-lived intangibles), and impairment isn’t triggered only by a decline in fair value (recoverable amount can be affected by value in use and other factors).

Impairment testing timing hinges on two factors: indications of impairment and specific annual requirements. Under IFRS 36, you must test for impairment whenever there are indications that an asset may be impaired, and you must also perform an annual impairment test for assets that require it—namely goodwill and indefinite‑lived intangible assets. In practice this means you monitor assets regularly and ensure an impairment test is done at least once a year for those particular assets, even if no indicators are present.

The other options aren’t correct because impairment testing isn’t mandated at the end of every reporting period for all assets, nor is it performed only when indicators exist for all assets (you still have annual testing for goodwill and indefinite-lived intangibles), and impairment isn’t triggered only by a decline in fair value (recoverable amount can be affected by value in use and other factors).