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FRS 102: accounting for asset impairment and goodwill - tips and advice

In part 15 of this exclusive New UK GAAP series, Helen Lloyd FCA reviews accounting for impairment of assets and goodwill, highlighting key differences between the new FRS 102 Section 27 Impairment of Assets and former FRS 11 Impairment of Fixed Assets and Goodwill

Section 27 Impairment of Assets prescribes the accounting treatment for the impairment of non-financial assets other than those dealt with in another section of FRS 102 or that are within the scope of FRS 103 Insurance Contracts.

The equivalent standard in UK GAAP was FRS 11 (albeit with a slightly narrower scope) and in International Financial Reporting Standards (IFRS) is IAS 36 Impairment of Assets.

Essentially an impairment loss occurs when the carrying amount of an asset exceeds its recoverable amount. Various disclosures are required in respect of any impairment recognised in the income statement.

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