Impairment of Assets Impairment of Assets Impairment of Assets Impairment of Assets Impairment of Assets

We support our customers in carrying out impairment tests on assets. The impairment of assets is the subject of International Accounting Standard 36 (IAS 36) and National Accounting Standard No. 4. The aim of both standards is the presentation and the settlement of procedures assuring that the assets in the financial statements are recognized at a value not exceeding their recoverable amount defined as the higher of the two values:

  • fair value less selling costs
  • value in use.

The impairment of assets is analyzed, among others, with respect to:

  • tangible fixed assets (with the exception of those earmarked for disposal)
  • intangible fixed assets including goodwill
  • investments in subsidiaries, associated entities and joint ventures
  • real estate investments where the historical cost model is applied.

Entities should assess on every reporting date whether events took place that might have triggered the impairment of assets. Generally, triggering events can be divided into those originating in external sources of information (e.g. decrease in the market value of the given asset, significant and unfavorable technological or market changes, the growth of market interest rates) and in internal sources of information (the loss of usefulness of given assets, physical destruction of assets, financial results generated by the assets worse than expected). Should triggering events take place, the entity should carry out impairment tests. Providing the recoverable value of an asset is below the carrying amount, the entity should decrease the balance sheet value of the asset and simultaneously recognize the impairment loss.

Regardless of the existence or otherwise of triggering events, the entities are obliged to carry out impairment tests every year for the following assets:

  • goodwill
  • intangible fixed assets with undefined usage period
  • intangible fixed assets under construction.

When estimation of the recoverable value of a single asset is not possible, entities should carry out the analyses of the recoverable value cash generating unit (CGU), to which the given asset belongs.

Estimating the value in use is the key element in carrying out impairment tests. The value in use of a separate asset or a cash generating unit is estimated as the present value of future cash flows to be generated by the asset or the unit respectively. Consequently, to arrive at the value in use it is necessary to prepare reasonable projections of cash flows and to estimate the discount rate.

The team members have had over 20 years of experience in advisory projects for our clients

We have carried out over 100 business and intangible asset appraisals to serve our clients

The first specialist in Poland of the American Society of Appraisers manages our advisory team

Cann Advisory Offer

Business Valuation

We are specialists in performing valuations of entire businesses, organised business units, majority and minority shareholdings, investment projects as well as valuations...

Valuation of Intangible Assets

We offer professional support in the area of the valuation of intangibles. Intangibles - e.g. trading names, trademarks, brand names, patents, licenses, know-how...

Impairment of Assets

We support our customers in carrying out impairment tests on assets. The impairment of assets is the subject of International Accounting Standard...

Financial Advisory in Business Litigation

We prepare opinions on the value of business damages for the purpose of business litigation.

Energy sector advisory

ENERGYCANN is a team of practitioners specializing in advisory services for energy sector entities.

Acquisition Advisory

During your acquisition process we offer you total dedication, full committment, flexibility and deep market knowledge to identify deal breakers...

Divestiture Advisory

We are ready to become your lead financial advisor organising a competitive sales process by providing a superior execution, focused and timely sales process...

Due Diligence

A due diligence is an essential step during an acquisition process. It analyses the key drivers and core functioning of an enterprise.

Capital Raising

We are able to support you in the search for additional capital for your business. Our contacts, experience and capabilities will help you with sourcing additional financing...


Cann Advisory sp. z o.o. sp. k.
Plac Jana Henryka Dąbrowskiego 1
00-057 Warszawa

tel. +48 22 616 20 32


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Impairment of Assets