What should entities consider for impairment of assets?

The Public Sector Accounting Forum (PSAF) heard there is uncertainty in practice about impairment of assets. The PSAF discussed the following questions:

• Whether impairment losses are a permanent decline in value: Yes, the impairment should be permanent or significant.
• Whether impairment only relates to assets in use: No, impairment also applies to work-in-progress.
• Whether a decline in the market value of assets is an indicator of impairment for non-cash-generating assets: Yes, the indicator applies to both cash- and non-cash-generating assets.
• What method should be used to determine value in use: Management assesses which method is appropriate based on the information available and the suitability of the method for the scenario that led to the impairment of the asset.

Whether a certain physical condition, e.g. “poor”, is an indicator of impairment: Maybe, but it should be assessed against where the asset is in its life cycle.