Write-Down

A permanent reduction in the carrying value of an asset on the balance sheet when its recoverable amount falls below its book value. Goodwill and other intangible assets must be tested annually for impairment, and write-downs can significantly affect reported earnings.

A non-cash charge recorded when the carrying value of goodwill on the balance sheet exceeds its estimated recoverable amount. Goodwill impairment testing, required annually under IFRS and US GAAP, often signals that the intangible value anticipated at the time of acquisition — including synergies, customer relationships, and growth potential — has not been realised.

The higher of an asset's (or cash generating unit's) fair value less costs of disposal and its value in use. Under IAS 36, an impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

The IFRS standard that establishes procedures to ensure assets are carried at no more than their recoverable amount — the higher of fair value less costs of disposal and value in use. IAS 36 requires impairment testing whenever there is an indication of impairment, and at least annually for goodwill and intangible assets with indefinite useful lives.

The mandatory annual assessment (and more frequent assessment when indicators exist) of whether the carrying amount of goodwill exceeds its recoverable amount. Under IAS 36, goodwill is tested at the cash generating unit level by comparing the unit's carrying amount (including allocated goodwill) with its recoverable amount.

An intangible asset that arises when a company is acquired for more than the fair value of its net identifiable assets. Goodwill reflects factors such as brand value, customer loyalty, workforce expertise, and synergies that are expected to generate future economic benefits.

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets. Under IAS 36, when an individual asset's recoverable amount cannot be estimated in isolation, impairment testing is performed at the CGU level.

A valuation methodology that estimates the value of an asset based on the present value of expected future economic benefits, such as cash flows, earnings, or cost savings. The income approach is the most widely used method for valuing intangible assets and includes techniques such as the relief-from-royalty and multi-period excess earnings methods.