Companies are required to assess assets for impairment periodically in accordance with IAS 36. An asset is considered impaired when it’s carrying amount exceeds its recoverable amount. The Standard defines the recoverable amount as the higher of the fair value less cost to sell and the value in use (VIU) of an asset and defines the VIU of an asset as the present value of the future cash flows expected to be derived from the asset. This can be on an individual asset basis or as a Combine Cash generating Unit.
This assessment with its complicated components can sometimes be overwhelming to businesses. At Pageline, we can break down the complicated components required for this assessment and develop a spreadsheet which will automatically assess your assets or CGU’s for impairment. This may be done by calculating the present value of cash flows discounted at an appropriate discount rate automatically. We will also work with you to establish an appropriate Fair Value and compare this with the assets / CGU’s carrying value. A spreadsheet model can automate impairment assessments in a convenient and accurate manner.