Question

What are some external and internal indicators of impairment?

Answer 1

External indicators of impairment are

1. Drastic change in economic or legal factors affecting the company or its assets.

2. Significant fall in the market price of the asset.

3. Muted demand for a medium term period due to global macro economic conditions.

Internal indicators of impairment are

1. Asset as a part of a restructuring or held for disposal.

2. Obsolescence or physical damage of the asset

3. Inability to bring in post merger synergy benifits that were expected earlier.

4. Worst economic performance than what is expected.