Methodology for testing assets for impairment during the coronavirus pandemic

Accounting for the impairment of assets is one of the difficult issues in the preparation of financial statements. However, despite the considerable attention of domestic and foreign accounting science to tangible and intangible assets, the methodological apparatus for analyzing the procedure of asset impairment remains insufficiently developed. Issues that take into account the specifics of the development of the economic environment for the functioning of companies, the state and degree of the accounting and financial reporting system have not been worked out, which requires a comprehensive study of methodological issues of checking assets for impairment. Assessing whether an asset has decreased in value can be highly subjective and impairment can appear as a failure of directors, prompting management to underestimate the impairment loss. An impairment loss could have a material effect on a company's financial statements if the assets are overvalued. The main difficulties lie in recognizing when it is necessary to conduct impairment tests, applying the value in use and determining the cash-generating unit (CGU). In some cases, the application of the standard may be difficult, and therefore companies may inadvertently include distorted data in the reporting. The article discusses the application of the rules for determining indicators of impairment during the coronavirus pandemic. Particular attention is paid to the consideration of the principles and procedures of IFRS IAS 36, which apply to the impairment of assets in the form of a right of use. Based on the results of this study, several recommendations have been compiled for accountants who need to conduct an impairment test.

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