IAS 36 Impairment of Assets explains how to ensure that an asset is carried at no more than its recoverable amount. Where assets are impaired, they must be written down to their recoverable amount so they are not shown at an excessive value in the statement of financial position.

IAS 36 is a standard which is often highlighted by the Financial Reporting Council (FRC) as an area of concern and so it is crucial that the principles are applied and disclosed appropriately. In the latest FRC Annual Review of Corporate Reporting 2019/2020, impairment of assets was raised and is also an area of focus in light of Covid-19.