Intangible assets and goodwill often represent significant value on a company’s balance sheet, such significant values are obtained from acquired businesses, brands, technology, or intellectual property. However, these assets must be regularly tested for impairment to ensure their carrying values are not overstated.
At CompaniesNext, we provide comprehensive impairment studies to assess whether intangible assets and goodwill are impaired, in compliance with accounting standards such as IND AS 36 and IFRS.
Accurate Financial Reporting: Ensures that asset values reflect their recoverable amounts, maintaining the integrity of financial statements.
Regulatory Compliance: To keep in compliance with the regulatory authorities, failure to do so can impose penalties.
Informed Decision-Making: By knowing the current market recoverable amounts management can make more efficient decisions.
Investor Confidence: Provides transparent disclosures that build trust with shareholders and analysts.
Generally an impairment study involves:
Identification of Cash-Generating Units (CGUs): Grouping assets that generate independent cash flows.
Determination of Recoverable Amount: The higher of fair value less costs of disposal or value-in-use based on discounted cash flow projections.
Comparison with Carrying Amount: The goal is to identify impairment which arises if the carrying value exceeds recoverable amount
Quantification of Impairment Loss: Calculating the applicable impairment charge and recognizing it in the financial statements.
Assessment of Key Assumptions: Evaluating assumptions such as discount rates, growth rates, and cash flow forecasts for reasonableness and consistency.
We have a team with deep industry knowledge and network along with technical skills to accurate assess impairment:
Robust and Defensible: We make financial models that are backed by research and sound reasoning which makes a strong moat that is defendable in every situation.
Aligned with Accounting Standards: Fully compliant with IND AS 36, IFRS, and US GAAP requirements.
Transparent and Clear: Providing detailed reports with explanations and disclosures suitable for auditors and regulators.
Tailored to Your Business: Considering your industry dynamics, business strategy, and economic environment.
With extensive experience across industries and asset types, CompaniesNext helps companies safeguard asset values and navigate complex impairment requirements confidently. Our pragmatic insights assist management and auditors alike in validating asset carrying amounts and addressing impairment risks proactively.
📩 Need expert impairment analysis for your intangible assets and goodwill? Contact CompaniesNext for accurate, reliable, and compliant impairment studies.
What is an impairment test for goodwill?
It assesses whether the carrying value of goodwill exceeds its recoverable amount, as per Ind AS/IFRS.
How often should impairment testing be done?
At least annually for goodwill and when there are indicators of impairment for intangible assets.
What are indicators of impairment?
Poor financial performance, industry decline, legal changes, or loss of key customers.
Which standards govern impairment testing?
Ind AS 36 in India and IAS 36 internationally.
What methods are used for impairment testing?
Mainly Discounted Cash Flow (DCF) analysis to estimate value in use.
Do you help with disclosures for financial statements?
Yes, we prepare detailed disclosures and support auditors with required documentation.
How long does the impairment study take?
Typically 1–3 weeks depending on asset complexity and data availability.
What is a Cash Generating Unit (CGU)?
The smallest group of assets generating independent cash flows, used for impairment testing.
Can impairment loss be reversed later?
For intangible assets (except goodwill), reversal is possible under certain conditions.
Is your report acceptable to statutory auditors?
Yes, our reports follow accounting standards and are widely accepted by auditors.
