IAS 36 — Impairment of Assets

Abstract

In June 2001, FASB issued Accounting Standard FAS 141 ‘Business Combinations’ and FAS 142 ‘Goodwill and Other Intangible Assets’. After the ‘Pooling of Interest’ method, which was very popular for consolidation of new acquired companies because of the possibility to add the profit of the acquired company for the whole financial year to the profit of the purchasing company, even if the acquisition took place on the last day of the financial year, could no longer be applied, the US government offered a compensation and allowed that intangible assets and especially goodwill should no longer be depreciated. For consolidation purposes, the method to calculate and define a goodwill was regulated with more detailed precision and the ‘impairment only approach’ was introduced to review any nondepreciable goodwill for possible lower values.