IAS 36 Impairment of Assets requires that all assets should be reviewed for impairment where appropriate and any impairment loss dealt with in the financial statements.

The objective of IAS36 is to ensure that assets are carried at no more than their recoverable amount, and to define how recoverable amount is determined.

Required:

Q1.

(a)Describe what is meant by impairment and briefly explain the procedures that must be followed when performing an impairment review.

(b)Critically discuss the useful of financial statements for decision makers in placing reliance on the values of assets in the statement of financial position, given the subjectivity required in the application of IAS 36: Impairment of Assets.