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Important Stuff on Ind AS 36, Impairment of Assets

Indian Accounting Standard (Ind AS) 36, Impairment of Assets, Important Material

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Ind AS 36: Impairment of Assets

Impairment of assets means weakening in value of assets. An asset is said to be impaired when the carrying amount of asset is more than its recoverable amount.

Carrying Amount is the amount at which assets are shown in the Balance Sheet, i.e. generally at cost less accumulated depreciation or amortisation and accumulated impairment losses.

Recoverable amount of an asset is higher the following:
(i) Fair value less cost of disposal;
(ii) Value in use i.e. estimated future cash flow arising from use of asset+ residual price at the end of its useful life.


The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at not more than their recoverable amount.

An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. In that case, the asset is described as impaired and the Standard requires the entity to recognise an impairment loss.

The Standard also specifies when an entity should reverse the impairment loss and prescribes appropriate disclosures.


This Standard shall be applied in accounting for the impairment of all assets, other than:
(i) Inventories (Ind AS 2, Inventories);
(ii) Contract assets and assets arising from costs to obtain or fulfil a contract that are recognised in accordance with Ind AS 115;
(iii) deferred tax assets (Ind AS 12, Income Taxes);
(iv) assets arising from employee benefits (Ind AS 19, Employee Benefits);
(v) financial assets that are within the scope of Ind AS 109, Financial Instruments;
(vi) biological assets related to agricultural activity within the scope of Ind AS 41 Agriculture that are measured at fair value less costs to sell ;
(vii) deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of Ind AS 104, Insurance Contracts; and
(viii) non-current assets (or disposal groups) classified as held for sale in accordance with Ind AS 105.


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