Chapter 4: Impairment

The impairment testing of investments in subsidiaries, associates and joint ventures in separate financial statements depends on the accounting policy choices made for the measurement of such investments: Investments accounted for at cost in separate financial statements are within the scope of IAS 36 for impairment. Investments accounted for in accordance with IFRS 9 are within the scope of IFRS 9 for impairment. Where investments are accounted for using the equity method, IAS 28 should be followed, to identify potential impairment indicators. If such impairment indicators are identified, IAS 36 is applied, to determine the amount of any impairment loss.

Impairment of investments in subsidiaries, joint ventures and associates

Investments in subsidiaries, joint ventures and associates accounted for in an entity’s separate financial statements in accordance with IFRS 9 (or, for entities that have not yet adopted IFRS 9, IAS 39), or using the equity method in accordance with IAS 28, should be assessed for impairment in accordance with the requirements of those Standards.

Impairment of investments in subsidiaries, joint ventures or associates in separate financial statementsWhen an entity accounts for its investments in subsidiaries, joint ventures or associates at cost in its separate financial statements in accordance with IAS 27, it should apply the requirements of IAS 36 to test those investments for impairment. This view has been confirmed by the IFRS Interpretations Committee having regard to the scope provisions of IAS 36, IFRS 9 and, for entities that have not yet adopted IFRS 9, IAS 39. Note that this issue was also considered by the IFRS Interpretations Committee in July 2009. At that time, the Committee determined that the requirements in this regard were not clear. However, the January 2013 decision is the more up-to-date guidance.