Impairment Testing — rigorous CGU valuation, defensible to the auditor and the board

Ind AS 36 requires entities to assess, at each reporting date, whether there is any indication that an asset may be impaired; and to test goodwill and indefinite-life intangibles for impairment annually (irrespective of indicator). Transique delivers full-scope impairment-testing exercises — CGU identification, recoverable-amount measurement (value-in-use or fair-value-less-costs-of-disposal), allocation of corporate assets, and sensitivity / disclosure support.

Our work covers routine annual reviews and trigger-based reviews (e.g., post-acquisition write-downs, post-impairment signal events). Every engagement is sized to the specific complexity — we do not sell one-size-fits-all impairment packages.

When you need us

You have goodwill or indefinite-life intangibles on your balance sheet and require the annual Ind AS 36 test.
An impairment indicator has triggered a required test under Ind AS 36.
Your auditor has queried the prior-period impairment analysis.
You are planning a disposal, discontinuation or reorganisation with impairment implications.
You are transitioning between reporting frameworks and need a baseline impairment review.

What we deliver

CGU-identification memo — aligned to the way management monitors operations.
Recoverable-amount analysis using VIU, FVLCD or both.
Discount-rate build-up using India-specific risk premia; pre-tax rate derivation.
Budget-stress-testing — reasonableness of the five-year forecast vs past performance.
Sensitivity disclosures for the financial statements (key-assumption sensitivity).
Auditor-walkthrough support.

Our methodology

CGU identification. Review of internal management-reporting; align CGUs with the lowest level of largely independent cash inflows.
Indicator review and scope confirmation.
Forecast analysis. Five-year plan review; reasonableness; terminal-value.
Recoverable amount. VIU or FVLCD per CGU; pre-tax discount rate; terminal growth rate.
Sensitivity. Key-assumption stress-tests; triggers for potential future impairment.
Disclosure support. Drafting language for notes to the financial statements.

Technical grounding

Pre-tax vs post-tax discount-rate reconciliation.
Allocation of corporate assets and common costs to CGUs.
Treatment of restructuring-related cash flows (excluded from VIU).

Representative engagements

Client/s	Location	Engagement type	Sector/s
Godrej Enterprises Group	Godrej – Mumbai, Sheetak Inc – Austin, Texas – USA UEP Inc – Pearl River, New York – USA	Business Valuation of “Sheetak Inc” and “Urban Electric Power Inc.” USA based innovative investee companies	Semiconductor Batteries

Frequently asked questions

How is the discount rate determined for impairment testing?

The discount rate under Ind AS 36 is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset. We build it from a post-tax WACC derived using CAPM (risk-free rate, equity-risk premium, India country-risk premium, beta, size premium, capital-structure weights) and convert to a pre-tax rate using the method best suited to the cash-flow profile.

What if our CGU has no external market — can we use FVLCD?

FVLCD requires observable market data where available, and valuation-techniques-with-unobservable-inputs where market data are limited. For CGUs without an active market, VIU is often the more practical primary method; FVLCD can be used as a cross-check.

Can you test impairment for SME-grade companies?

Yes. Most SME-sized Ind AS-reporting companies face simpler CGU structures but the same methodological rigour. Our engagement model is calibrated to the complexity, not to an arbitrary fee floor.

What is the auditor’s typical review focus?

Discount-rate build-up, terminal-growth assumption, reasonableness of the forecast against historical performance, CGU identification, and sensitivity disclosures. We write the report to anticipate each.

Talk to us about your impairment test

Use the Consult Us form at the top of this page, or book a call. A partner responds within one business day.

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