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Impairment in the current economic scenario
03-13-2009, 09:56 PM
Post: #1
Impairment in the current economic scenario
The last 12 months have been marked by increased volatility in and slowdown in global markets. The credit crisis has become a widespread if not global slowdown and ripples are being felt in territories and markets across the world as economic growth slows. The economic downturn in many countries may worsen as the financial crisis continues.

The widespread slowdown means that assets and businesses in many industries will generate lower cash flows than expected. This increases the likelihood that asset carrying amounts are greater than the expected cash flows from the assets. Impairment charges may well be required. IAS 36, 'Impairment of assets' is one of the more complicated standards and this can make getting the accounting and disclosures right more of a challenge. The volatility of currency and commodity markets and unpredictable interest rates add a further layer of complexity to impairment testing this year.
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