archived_user
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- Jun 18, 2026
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I have seen a few different methods (from different study providers… sigh) for impairing assets, which is super confusing. So for the sake of accuracy, I’m using Flashback’s method here: http://www.analystforum.com/forums/cfa-forums/cfa-level-i-forum/91346665
Could someone kindly just check if this is right (it looks right to me)?
I’m assuming:
Carrying Value = Net Book Value,
Selling Price = Fair Value, and
Net Realizable Value = Fair Value - Selling Costs
IFRS - Impairment 1 step approach
Asset should be impaired if its BV (cost of purchase - accumulated depreciation if exists) is > recoverable amount.
Recoverable amount is greater (higher amount) of:
a) fair value - cost of selling
and
b) value in use (PV of future CF thus DCF value)
Loss reversals are permitted but only to the original amount of prior impairment.
USGAAP - Impairment 2 steps approach
1. step - recoverability test - asset should be impaired if its BV > undiscounted future cash flows
2 .step - impaired asset is written down to fair value (loss is excess of BV - fair value) or discounted future cash flows, which is greater
Loss reversals are not permitted under USGAAP.
Could someone kindly just check if this is right (it looks right to me)?
I’m assuming:
Carrying Value = Net Book Value,
Selling Price = Fair Value, and
Net Realizable Value = Fair Value - Selling Costs
IFRS - Impairment 1 step approach
Asset should be impaired if its BV (cost of purchase - accumulated depreciation if exists) is > recoverable amount.
Recoverable amount is greater (higher amount) of:
a) fair value - cost of selling
and
b) value in use (PV of future CF thus DCF value)
Loss reversals are permitted but only to the original amount of prior impairment.
USGAAP - Impairment 2 steps approach
1. step - recoverability test - asset should be impaired if its BV > undiscounted future cash flows
2 .step - impaired asset is written down to fair value (loss is excess of BV - fair value) or discounted future cash flows, which is greater
Loss reversals are not permitted under USGAAP.