Accounting Brief: Impairments of right-of-use assets

For most entities, the implementation of Accounting Standards Codification (ASC) 842, Leases, has now been completed. As entities have moved on to post-implementation accounting, the topic of impairments has proven to be somewhat problematic for a number of lessees. This paper addresses the accounting for impairments of Right-of-Use (ROU) assets which falls under the same impairment model applicable to property, plant and equipment. The guidance for the property, plant and equipment impairment model can be found in ASC 360-10-35. The ASC 360-10-35 impairment model requires entities to (i) identify asset groups, (ii) perform a recoverability test if a triggering event has been identified, and (iii) if applicable, recognize and allocate any impairment loss identified. This article also addresses long-lived assets that will be abandoned.