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Impairment Loss Calculator

Work out impairment loss instantly with clear inputs, formula shown and shareable results.

About Impairment Loss Calculator

An asset is impaired when its carrying amount exceeds its recoverable amount, defined as the higher of fair value less costs of disposal and value in use. The write-down is the difference, and it goes to profit or loss unless a revaluation surplus exists to absorb it.

Formulas

Recoverable amount

Recoverable = max(Fair value less costs of disposal, Value in use)

Impairment loss

Loss = max(0, Carrying amount - Recoverable amount)

Worked example

With the default values below, Impairment Loss Calculator returns Impairment loss to recognise of $75,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Carrying amount
500,000
Fair value less costs of disposal
380,000
Value in use (discounted cash flows)
425,000

Results

Impairment loss to recognise
$75,000.00
Recoverable amount
$425,000.00
Carrying amount after impairment
$425,000.00
Basis used
Value in use is the recoverable amount

Step by step

  1. 1Values used
  2. 2Recoverable amount
  3. 3Impairment loss
  4. 4Impairment loss to recognise= 75,000.00
  5. 5Recoverable amount= 425,000.00
  6. 6Carrying amount after impairment= 425,000.00
  7. 7Basis used= Value in use is the recoverable amount

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Indicative accounting estimate. Impairment testing depends on cash-generating unit definition, discount rates and framework (IFRS or local GAAP). Not accounting or financial advice.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Indicative accounting estimate. Impairment testing depends on cash-generating unit definition, discount rates and framework (IFRS or local GAAP). Not accounting or financial advice.

Frequently Asked Questions

Why take the higher of the two?

Because a rational entity will choose the better of selling the asset or continuing to use it, so the loss should reflect the better option.

Can an impairment be reversed?

For most assets yes, if the recoverable amount recovers — but never for goodwill under IFRS.

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