In the context of IAS 36, the external and internal indicators that impairment of non-current assets or goodwill may have occurred. Briefly give one example each.

External sources of information

• Observable indications that the assets value has declined during the period significantly more than would be expected as a result of the passage of time or normal use.
• Significant changes with an adverse effect on the entity in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated.
• Market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an assets value in use and decrease the assets recoverable amount materially.
• The carrying amount of the net assets of the entity is higher than its market capitalization.

External sources of information

• Obsolescence or physical damage of an asset.
• Significant changes with an adverse effect on the entity related to the use of an asset, for example: an asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite.
• Evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected.