Impairment test
A check of whether an asset's carrying value exceeds the amount that asset is capable of bringing in.
How to read the number
Performed when indicators of impairment appear, and for goodwill annually, whether or not there are indicators.
When the metric lies
The outcome depends on the discount rate and the forecast, both set by the company itself. The absence of a write-down does not prove the asset is sound.
Also known as: impairment review