M26056 – Asset Impairment: Principles, Judgement And Practical Application Under IFRS And GAPSME (Online)

Registration Time: 09:00
Session Time: 09:15 – 12:30 including a 15-minute break
Speaker: Mr Paul Zammit
Venue: Online Webinar

Participation Fees

MIA Members: €40.00 | Non-MIA Members: €75.00 | Retired Members: €20.00 | Students: €30.00
Group bookings for 3 or more participants available.

Background Information

IAS 36 ‘Impairment of Assets’ establishes the principles entities must follow to ensure assets are not carried at amounts higher than their recoverable amount. Similar principles are included in GAPSME. This session provides a structured, practical understanding of the impairment framework under IAS 36 and the equivalent GAPSME requirements.

Topics Covered

– Overview and objectives of IAS 36
– Indicators of impairment and when an impairment test is required
– Determining the recoverable amount of an asset
– Value in use and fair value less costs of disposal
– Identification and testing of cash-generating units
– Allocation of impairment losses within a CGU
– Reversal of impairment losses and limitations
– Special considerations for goodwill and intangible assets
– Common practical issues

Target Audience: Practicing accountants, auditors, finance professionals and accounting students.

Speaker: Paul Zammit, CPA specialising in IFRS and GAPSME, MIA Financial Reporting Committee member.

CPE Competencies: 3 Core

Read More

The upcoming session on asset impairment under IFRS and GAPSME, scheduled for 24 July, highlights one of the more judgemental areas of financial reporting. As explored through this CPE session, impairment assessments are not merely a technical exercise but require careful evaluation of both quantitative and qualitative factors, often under conditions of uncertainty.

At the core of impairment accounting lies a fundamental principle: assets should not be carried at amounts exceeding their recoverable value. Where the carrying amount of an asset is no longer supported by the economic benefits it is expected to generate, an impairment loss must be recognised to reflect this reality. This principle applies across both IFRS and GAPSME, ensuring consistency in how entities assess the value of their assets within the Maltese financial reporting framework.

In practice, however, applying this principle is far from straightforward. One of the key challenges lies in identifying indicators of impairment. These may arise from a wide range of internal and external factors, including changes in market conditions, operational performance or technological developments. Determining whether such indicators are present requires a high degree of judgement, particularly where signals are not clear‑cut or where multiple factors interact.

A further area of complexity arises in estimating the recoverable amount of an asset. This often involves significant assumptions about future cash flows, economic conditions and the performance of the underlying asset or business. In periods of economic uncertainty, these assumptions become even more challenging to support, increasing the level of estimation uncertainty and the risk of inconsistency in application.

The judgemental nature of impairment testing is particularly evident when dealing with assets that do not generate cash flows independently. In such cases, practitioners are required to assess impairment at the level of cash‑generating units, which introduces additional layers of complexity in determining how assets are grouped and evaluated.

Given these challenges, the importance of robust and well‑documented assessments cannot be overstated. Clear documentation is essential not only to support the assumptions and conclusions reached but also to demonstrate compliance with the applicable reporting frameworks. In a regulatory and audit context, the ability to evidence the rationale behind key judgements is a critical component of high‑quality financial reporting.

Moreover, impairment assessments often require practitioners to strike a careful balance between prudence and objectivity. While there may be a tendency to adopt conservative assumptions, particularly in uncertain environments, these must remain grounded in reasonable and supportable evidence. This reinforces the need for a structured approach that combines technical knowledge with professional judgement.

Ultimately, impairment accounting serves as a key mechanism for ensuring that financial statements provide a faithful representation of asset values. For practitioners, this means not only understanding the underlying principles but also being aware of the practical challenges that arise in their application. As the session emphasises, developing a disciplined and well‑supported approach to impairment assessments is essential to maintaining credibility and consistency in financial reporting.

Register: https://members.miamalta.org/event-6616657/Registration
Event page: https://members.miamalta.org/event-6616657