Impairment test – verify the real value of your assets
What is an impairment test?
An impairment test is a mandatory process to assess whether the carrying amount of a given asset – e.g. goodwill, a trademark, a licence or a fixed asset – exceeds its recoverable amount.
If the assets are impaired, an impairment loss must be recognised – in accordance with the provisions of the Polish Accounting Act or International Financial Reporting Standards (IFRS/IAS).
When is an impairment test carried out?
- Annually – for goodwill or other intangible assets with an indefinite useful life,
- When there are indicators of impairment (losses, market changes, restructuring),
- Before preparing the annual financial statements,
- As part of the consolidation process or valuation of a CGU,
- Following M&A transactions or contributions in kind.
Who is the impairment testing for?
Impairment testing is intended for:
- companies required to apply IFRS/IAS,
- companies holding significant intangible assets (goodwill, IP, licences),
- corporate groups preparing consolidated financial statements,
- entities that have experienced a deterioration in financial performance,
- companies following reorganisation, restructuring or the sale of assets.
What does the impairment testing process involve?
- Identification of cash-generating units (CGUs),
- Analysis of indicators of possible impairment,
- Determination of the recoverable amount (fair value less costs of disposal or value in use),
- Comparison with the carrying amount,
- Preparation of a report and documentation compliant with IFRS or the Polish Accounting Act,
- Support in communication with the auditor.
Why choose us for asset and CGU impairment testing?
We specialise in carrying out professional asset impairment tests in accordance with IFRS/IAS and the Accounting Act. Our analyses support management boards and auditors in making robust financial decisions.
- Experience in impairment testing and asset valuation – we carry out analyses in accordance with IFRS/IAS and the Accounting Act, covering various asset classes and cash-generating units (CGUs)
- Expertise in DCF methodology and market approaches – we apply proven models for estimating fair value and future cash flows
- Transparent and useful documentation – reports ready for presentation to auditors, management and investors
- A team of experts – the tests involve advisers, finance professionals with experience in financial reporting and valuations
- Integration with the business or CGU valuation process – test results can be directly utilised in the full business valuation
Thanks to our experience, the asset impairment test becomes a reliable tool supporting financial, tax and transactional decisions.
Benefits of impairment testing
- Compliance with accounting regulations and international standards,
- Reliability of financial data,
- Reduced risk of penalties resulting from incorrect disclosures,
- Professional documentation for audit purposes,
- Greater confidence in assessing the recoverable value of assets.
Our experience
We have carried out impairment tests for numerous clients – ranging from private companies to corporate groups subject to IFRS/IAS reporting requirements. Our experience includes, among other things:
- goodwill impairment tests following mergers and acquisitions,
- CGU impairment tests for IT, e-commerce and pharmaceutical companies,
- projects relating to the impairment of trademarks, know-how and licences,
- preparation of documentation for auditors,
- impairment tests of assets contributed in kind to a company,
- support in situations requiring the recognition of impairment losses.
All reports comply with IFRS/IAS or the Accounting Act – and have been accepted by statutory auditors. By combining financial and valuation expertise, we ensure reliable and well-documented process.
FAQ
What is an impairment test?
It is a procedure to check whether the carrying amount of assets exceeds their recoverable amount.
When should an impairment test be carried out?
Annually – for goodwill, and also when there are indications of an impairment (losses, market changes, etc.).
How long does it take to prepare an impairment test?
Usually between 5 and 15 working days – depending on the type and number of assets being tested.
Does impairment testing involve a valuation?
Yes – it is usually necessary to value the assets, e.g. using the DCF method or a market/comparative approach.
Do you support communication with the auditor?
Yes – we provide full documentation of the test and support you in discussions with the auditor.
Do you need an impairment test for your assets?
Contact us – we will carry out the test in accordance with applicable standards, prepare a report and provide full substantive and formal support.