Double Exit

IAS 36 (Impairment)- Survey of Irish Plcs

Following on from a previous post on IAASA’s publication of their observations on topical financial reporting issues in 2017, IAASA have also just recently published the results of a desktop survey focusing on how Irish Plcs apply IAS 36.

This is a great practical insight into the important issue of impairment testing in companies. Given the substantial amount of goodwill (many Irish Plcs make substantial acqusitions on an annual basis) and other intangible assets on company balance sheets, and the fact many of such assets have to be tested for impairment annually, there is a clear importance that IAS 36 is applied correctly. The impairment of goodwill and intangible assets is frequently noted in the auditor’s report as a key audit risk (e.g. See Glanbia AR 2016, Grafton AR 2016 – both links below)

Some of the key highlights of the report include;

  • the total goodwill and intangible assets recognised by the companies amounted to €24.7 billion, equivalent to 35% of those companies’ aggregate equity or 8% of their total non-current assets;
  • the top four sectors (containing nine companies) recognised 90% (€22,372m) of the total goodwill and intangible assets (which would include the likes of DCC, Glanbia, Grafton all of whom would be very active in M&A deals leading to goodwill and other intangible assets);
  • almost 1 in 4 of the companies had an equity to market capitalisation ratio of greater than 100%. A ratio of 100% or more is an indication that an asset may be impaired;
  • the total impairment loss recognised by the twenty-nine companies amounted to €227m of which the goodwill and intangible asset impairment charge amounted to €158m. This represented an impairment loss ratio of 0.6% of the aggregate carrying value of goodwill and intangible assets.

The full report can be found here.


For some good examples of how IAS 36 has been applied in practice, take a look at the following annual reports;





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