Under asset impairment rules, when should an impairment review be performed?

Under asset impairment rules, when should an impairment review be performed?

• A. Only when there is an indication that an asset may be impaired
• B. Annually for all assets
• C. Only when fair value increases
• D. As part of routine inventory count

Answer: (A)

Impairment reviews are triggered by indicators of impairment. You assess at each reporting date whether external or internal signs suggest an asset’s recoverable amount may be less than its carrying amount. If indicators exist, you estimate recoverable amount and recognize an impairment if the carrying amount exceeds it. For most assets, you don’t test yearly; you test only when there are indications of possible impairment. An exception is goodwill and some indefinite‑lived intangible assets, which must be tested at least annually regardless of indicators. So the option stating you review only when there is an indication is the best fit.

Impairment reviews are triggered by indicators of impairment. You assess at each reporting date whether external or internal signs suggest an asset’s recoverable amount may be less than its carrying amount. If indicators exist, you estimate recoverable amount and recognize an impairment if the carrying amount exceeds it. For most assets, you don’t test yearly; you test only when there are indications of possible impairment. An exception is goodwill and some indefinite‑lived intangible assets, which must be tested at least annually regardless of indicators. So the option stating you review only when there is an indication is the best fit.