IAS 36 vs ASC 350 and 360: impairment differences

Impairment is where IFRS and US GAAP can produce very different answers for the same asset: an impairment under IFRS can be no impairment at all under US GAAP. This guide compares IAS 36 with ASC 360 for long-lived assets and ASC 350 for goodwill, with a worked example of the two tests.

By Muhammad Bilal, Chartered Accountant. Reviewed by Awais Jameel, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

IAS 36 vs US GAAP impairment differs most for long-lived assets. IAS 36 compares the carrying amount with the recoverable amount, the higher of fair value less costs of disposal and value in use, in one step. US GAAP's ASC 360 first applies a recoverability test using undiscounted cash flows, and only if that fails measures the loss against fair value. IFRS reverses impairment losses, except on goodwill, when value recovers; US GAAP never does. Goodwill impairment testing also differs in level and method.

At a glance

Long-lived assets, IFRS
One step: recoverable amount
Long-lived assets, US
Two steps: undiscounted test first
Reversal
IFRS yes (not goodwill), US never
Goodwill level
CGU (IFRS) vs reporting unit (US)
Goodwill test
Both one-step today
US private companies
May amortise goodwill
IAS 36 vs ASC 350 and 360: impairment differencesLong-lived assets, IFRS: One step: recoverable amount; Long-lived assets, US: Two steps: undiscounted test first; Reversal: IFRS yes (not goodwill), US never; Goodwill level: CGU (IFRS) vs reporting unit (US); Goodwill test: Both one-step today; US private companies: May amortise goodwill.KEY FACTS AT A GLANCEIAS 36 vs ASC 350 and 360: impairment differencesLong-lived assets, IFRSOne step: recoverableamountLong-lived assets, USTwo steps: undiscountedtest firstReversalIFRS yes (not goodwill),US neverGoodwill levelCGU (IFRS) vs reportingunit (US)Goodwill testBoth one-step todayUS private companiesMay amortise goodwillChecked against official sourcesTax BakersIAS 36 vs ASC 350 and 360: impairment differencesLong-lived assets, IFRS: One step: recoverable amount; Long-lived assets, US: Two steps: undiscounted test first; Reversal: IFRS yes (not goodwill), US never; Goodwill level: CGU (IFRS) vs reporting unit (US); Goodwill test: Both one-step today; US private companies: May amortise goodwill.KEY FACTS AT A GLANCEIAS 36 vs ASC 350 and 360:impairment differencesLong-lived assets, IFRSOne step: recoverable amountLong-lived assets, USTwo steps: undiscounted test firstReversalIFRS yes (not goodwill), US neverGoodwill levelCGU (IFRS) vs reporting unit (US)Goodwill testBoth one-step todayUS private companiesMay amortise goodwillChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

IAS 36 vs ASC 360: how are long-lived assets tested?

IAS 36 vs US GAAP impairment at a glanceIAS 36 vs US GAAP impairment at a glanceTOPICIFRSUS GAAPUndiscounted cash flow screenNot usedRequired firstMeasure loss againstRecoverable amountFair valueReverse impairment (not goodwill)AllowedNot allowedReverse goodwill impairmentNot allowedNot allowedGoodwill amortisation optionNot allowedPrivate companies
The undiscounted screen and the ban on reversals make US impairments later and permanent.
StepIAS 36ASC 360 (assets held and used)
TriggerIndicators of impairment at each reporting dateEvents or changes in circumstances
Level of testingAsset or cash-generating unitAsset group: lowest level of identifiable cash flows
TestCarrying amount vs recoverable amount (higher of fair value less costs of disposal and value in use)Step 1: carrying amount vs undiscounted future cash flows. Step 2, only if step 1 fails: loss measured against fair value
Impairment reversalRequired if the estimates used have changed, except goodwillProhibited

An example: impaired under IFRS, not under US GAAP

A manufacturer's production line has a carrying amount of 1,000. Falling demand triggers a test. The line is expected to generate undiscounted cash flows of 1,050 over its remaining life, worth 850 when discounted (its value in use); its fair value less costs of disposal is 800.

IAS 36ASC 360
TestRecoverable amount: higher of 850 (value in use) and 800 = 850Undiscounted cash flows 1,050 exceed carrying amount 1,000
ResultImpairment loss of 150Recoverability test passed: no impairment
New carrying amount8501,000

Because the US test uses undiscounted cash flows, impairment is recognised later under US GAAP. When it is recognised, though, it is measured at fair value, which can mean a larger loss than IFRS's value in use.

How does goodwill impairment differ?

IAS 36ASC 350
Allocated toCash-generating units or groups of units benefiting from the combination (see goodwill impairment testing)Reporting units: operating segments or one level below
FrequencyAnnually and when indicators existAnnually and when triggering events occur
Qualitative screenNo; recoverable amount must be estimated annuallyOptional qualitative assessment before the quantitative test
TestCarrying amount of the unit vs its recoverable amountCarrying amount of the reporting unit vs its fair value; loss limited to goodwill
Private companiesSame as publicMay elect to amortise goodwill over up to 10 years

Since 2017, US GAAP has used a single step for goodwill, removing the old calculation of implied goodwill, so the two frameworks are closer than before. For the IFRS mechanics, see IAS 36 explained.

What about indefinite-lived intangibles?

Both test them at least annually. US GAAP tests them separately at the asset level, with an optional qualitative screen; IFRS tests them individually or within a cash-generating unit, comparing with recoverable amount.

IAS 36 vs US GAAP: why does it matter for analysis?

IFRS reporters recognise impairments earlier and may reverse them, so their earnings can move both ways. US reporters recognise them later and never reverse them. When comparing companies across frameworks, look at impairment history and the assumptions disclosed, not just the charge for the year.

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Questions people ask

What is the difference between IAS 36 and US GAAP impairment?

IAS 36 uses a one-step test against recoverable amount and allows reversals except for goodwill; US GAAP uses a two-step test for long-lived assets, starting with undiscounted cash flows, and never reverses impairments.

Can impairment losses be reversed under US GAAP?

No, not for assets held and used and never for goodwill. IFRS allows reversal for assets other than goodwill.

Is goodwill impairment tested differently under IFRS and US GAAP?

Yes. IFRS tests cash-generating units against recoverable amount; US GAAP tests reporting units against fair value, with an optional qualitative screen.

Can private companies amortise goodwill?

Under US GAAP, private companies may elect to amortise goodwill over up to 10 years. IFRS has no such option.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS Accounting Standards
  2. FASB Accounting Standards Codification

Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.

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This guide is general information. It is not tax or legal advice for your situation.