An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136

This study evaluates how managers of Australian firms are implementing the regulation requiring the impairment of assets and whether asset impairments can be categorised as non‐discretionary. We find some evidence that realised asset impairments are reflective of regulatory requirements. However, for the majority of firms exhibiting at least one externally observable indicator of impairment, they are not recognising asset impairments, and recognition is often delayed. Accordingly, while realised asset impairments might be categorised non‐discretionary, the timing of their recognition appears highly discretionary. There is some evidence that the realisation of asset impairments increased subsequent to transition to IFRS; however, the majority of firms with indicators of impairment are still not recognising asset impairments.