Impairment of assets: practice of applying IFRS requirements

Wartime has sharply increased the risk that assets in IFRS financial statements will be shown at inflated carrying values. Formal "impairment committees" and the usual "no indication found" wording no longer work: many companies have objective triggers for impairment, but markets are often inactive, data is fragmented, and proving assumptions is more difficult than in "peaceful" models.

This webinar is about the discipline of professional judgment in impairment: how to deal with a lack of data, how to choose the primary standard for the test (rather than automatically IAS 36), how to build the logic of evaluation and documentation so that the conclusion is reproducible for the auditor and understandable to the user of the statements.

The purpose of the webinar is to form a holistic practical framework for the correct assessment, documentation and disclosure of wartime impairment: from triggers and evidence base to algorithms, cases and ready-made wording for notes.

What does "informal approach" mean? It is neither simplification nor "liberties". It is a structured way of dealing with incomplete or imperfect evidence, using the best available estimates, scenario modeling, calibration of assumptions, and transparent communication of confidence limits instead of "level one market prices." Key elements of the approach:

clear identification of impairment triggers in the military context;
selecting the relevant standard for the primary test and the measurement logic (fair value less costs to sell / value in use / net realizable value / expected credit losses);
avoiding double counting of risks (risk in flows or in the rate - not both at the same time);
scenarios and sensitivities aligned with budgets and management plans;
Documentation and internal quality control of conclusions.

The webinar program includes 50+ cases, examples, and practical situations. For example: you have a contract, but the margin has fallen - what does this mean for the capitalized costs of fulfilling the contract. Or the market for the sale of an asset is "dead" - what to do with the fair value. Or there are assets in one WGCC that can be impaired under IAS 36 and those that cannot - and how to allocate the loss. Many companies have such situations now, and they are constantly repeated in various forms. And there are many more benefits!

Your key benefits of participating in the webinar:

5+ hoursconcentrated practice on impairmentall asset groupsin wartime, without unnecessary theory and "water".
Cleardecision framework: how to determine,which standard is "first"for a particular asset, and how not to automatically reduce everything to IAS 36.
Algorithms and casesInventories, property, plant and equipment, intangible assets, assets under contracts with customers, financial assets, CGUs, corporate assets, impairment allocation and "lower bounds".
Practical approaches toestimates in the absence of dataInactive markets, scenarios, sensitivities, documenting assumptions in a way that can withstand an audit.
Readystructure of working files and disclosuresWhat to record in the note, how to formulate key assumptions, and how to explain changes in grades and test results in the notes.
For auditors:example checklist for verificationmodels of wartime impairment and enrollment as participation in the educational event of continuing professional training of auditors (duration - 15 hours).
HandoutsPresentation and case studies in electronic format (provided on the eve of the event).

Who will benefit from this webinar and why?

For managers and owners - Understand where the risk of overstated assets lies in the reporting and what questions to ask the financial service and the auditor to get a solution rather than a formal certificate.

For financial directors - get a working framework for wartime impairment models: what data to collect, how to align budgets with tests, how not to "double" risks in the rate and flows.

Chief accountants and IFRS accountants - a clear procedure for all asset groups: which standard to apply first, how to make calculations, postings, and notes without common mistakes.

For auditors - A practical checklist for verification: what constitutes sufficient evidence, where the logic most often breaks down, and how to quickly assess the quality of models and disclosures.

For note and XBRL experts - how to turn calculations into understandable disclosures: assumptions, sensitivities, reasons for changes, so that it is readable and auditable.

All-inclusive package for each participant:

Participation online

Recording

Presentation in PDF

Certificate of participation

Answers to questions during the broadcast

Auditors:

By the IASB after the webinarwill be formalized and submitted to the Public Oversight Body a package of documents thatconfirms participation in the educational event of continuing professional training of auditors (duration after the fact, butat least 5 hours).

📌Ready to join?

Register to get a practical set of tools for impairment of assets in IFRS reporting and have a ready-made logic for future estimates. Please leave your questions or practical situations in the comments section during registration, and we will take them into account in the webinar.

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For a detailed program of the event, please go to a separate pageat the link.

Program of the educational event:

The framework of the "informal approach" in wartime

1.1. The purpose of impairment and what has changed in the military context

Impairment as an accounting estimate and why it is now the most risky for reporting.
The military context as a "set of triggers": physical impacts, operational disruptions, financial factors, inactive markets, and rising capital costs.

1.2. "Standards map and priority"

The principle: first special standards, then IAS 36.
Inventories: the net realizable value approach.
Financial assets: expected credit loss model.
Assets/disposal groups: valuation when classified as held for sale.
Other non-current assets: determining the recoverable amount as the higher of fair value less costs to sell and value in use.
Fair value: dealing with inactive markets, hierarchy of inputs, model calibration.

1.3. Algorithm for choosing an approach to valuation (five steps)

Determining which standard is the "first" for a particular asset.
Building a test route by asset type.
Double risk check (risk either in the flows or in the rate).
Inactive markets: how to justify fair value measurements when no quoted prices are available.
Fixing the chosen approach and preparing sensitivities.

1.4. Data, evidence base, scenarios, sensitivity, documentation

What evidence to collect for each characteristic; how to organize scenario modeling and sensitivity.
Case illustration: when it is not necessary to overestimate the recoverable amount if the safety margin and tested sensitivity are not "broken".

Impairment of different asset groups: standards, algorithms, cases

2.1. Property, plant and equipment and capital investments in progress

Impairment triggers; asset or CGU level test.
Reimbursement from third parties as a separate economic event.
Cost model vs. revaluation model: loss recognition channel and impact on subsequent depreciation.

2.2. Intangible assets

When the test is annual and how to organize the testing schedule.
Peculiarities of determining the recoverable amount for intangible assets in wartime.

2.3 Investment property

The relationship between the investment property valuation model and the impairment test.
Individual economic events: loss, compensation, replacement assets.

2.4. Lease rights and underlying assets in operating leases

Lessee: impairment of the right-of-use asset.
Lessor: impairment of an underlying asset in an operating lease.

2.5. IAS 36 as a "core" for non-financial non-current assets

Signs of impairment: external and internal, adaptation to the military context.
Level of testing: asset or CGU; consistent identification of CGUs between periods.
Algorithm for determining the GGGC; active market for products; adjustment of domestic transfer prices to market prices.
Two illustrative examples of the independence of flows: a private railroad at a mine; bus routes with a mandatory minimum of services.
Building cash flows and terminal value: perpetuity vs. multiple.
Choosing a discount rate: before/after tax, sources, consistency with flows.
Practical examples of calculating value in use and terminal value.

2.6 Distribution of impairment within the CGUs

Algorithm for testing OCGCs: a separate test for a "clearly troubled" asset; OCGC test; loss allocation; "lower limits" of assets.
A practical numerical case with iterations and control reconciliations.

2.7. Corporate assets

The essence of corporate assets and the reason why they cannot be automatically merged into one OGCC.
Two approaches: reliable allocation (allocation bases); impossibility of allocation - test at the level of the CGU group.
A practical case of corporate assets and group testing.

2.8. Investments in subsidiaries, joint ventures and associates (in separate statements)

Impairment indicators for investments; formal trigger and cross-checking; documentation.

2.9. Assets under contracts with customers

Capitalized expense test: "remaining compensation minus direct costs not recognized".
Sequence: first, other standards, then the contractual asset test, then inclusion in the CGU.
Cases without impairment and with partial impairment, including distribution within CGUs.
Reversal of impairment: when it is allowed and how the recovery ceiling works.

2.10. Assets/disposal groups

The sequence of tests before classification and at the date of classification as available for sale.
Allocation of loss within a disposal group and the limits of such allocation.

2.11. Inventories

Indications of a write-down to net realizable value; individually or in groups.
Net realizable value vs. fair value.
Practical examples: materials for production, rework/packaging, events after the reporting date.

2.12. Financial assets and cash

Default and the role of overdue periods as indicators; rebuttability and accounting policies.
Stages, scenarios, reserve matrix; forecast adjustments to historical ratios.
Commitments to extend credit: provision as collateral and post-issuance carryforwards.
Financial guarantees: initial recognition, subsequent measurement and impairment.
Cash: whether subject to ROCA; clustering of banks; sensitivity; exceptions (cash on hand).

2.13. Ukrainian context of access to assets and inventory

Assets in the occupied/hazardous areas: logic of impact assessment and recognition of impairment losses before access is restored.

Accounting policy for impairment

What decisions should be recorded in the accounting policy: frequency of testing, criteria for identifying CGUs, approach to corporate assets, approach to inactive markets, scenarios and sensitivity, "double risk", workflow template and internal quality control procedures.

Note disclosures and interim reporting

How to turn calculations into understandable disclosures: triggers, key assumptions, sensitivity, explanation of changes compared to the previous period.
Interim reporting: impairment as a material event/transaction and disclosure of changes in estimates.

Olena Kharlamova

Olena Viktorivna Kharlamova — Founder and CEO of AIFRS Group (IFRS Agency, Arkhitektonika IFRS, IFAR Academy — International Finance, Accounting & Reporting Academy (United Kingdom)), partner at MASBA Private Higher Educational Institution, Vice President of the All-Ukrainian Public Association “Chamber of Auditors and Accountants of Ukraine,” member of the Public Council under the Ministry of Finance of Ukraine, member of the expert group on developing the UA XBRL taxonomy IFRS under the National Securities and Stock Market Commission (NSSMC), auditor, ACCA_FR, ACCA DipIFR with a teaching certificate, ICFM diplomas in IFRS, management accounting, internal audit, and financial management (Institute of Certified Financial Managers (United Kingdom)), CAP, TOP-35-IFRS-Professional, winner of the ICB LUCA Awards 2023 in the category “Contribution to the Development of IFRS in Ukraine,” Doctor of Economics, professor, expert practitioner and advisor on IFRS with over 20 years of experience.