What it is
Long-lived assets held and used are tested for impairment only when events or changes in circumstances indicate the carrying amount may not be recoverable. The test has two parts: recoverability, using undiscounted cash flows, and then measurement of the loss at fair value.
The memo documents the trigger review, the asset group, the cash flow test, the fair value measurement, allocation of the loss, the held-for-sale criteria and any revision to useful life. Entries and the disclosure inputs close the memo.
When to use it
- When a trigger appears: lost customer, idle plant, regulatory change, cost overrun or sustained operating losses.
- When management commits to sell an asset group.
- At year-end, to support the conclusion that no trigger occurred.
What’s inside
- Trigger indicator table with evidence
- Asset group identification and primary asset life
- Undiscounted cash flow recoverability test
- Fair value measurement and pro rata loss allocation with floors
- Held-for-sale criteria, entries and depreciable life revision
Standard cited
This template follows ASC 360-10. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
What is an asset group?
The lowest level at which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Impairment is tested at that level, not asset by asset.
Why undiscounted cash flows first?
The recoverability test compares the carrying amount with the undiscounted cash flows over the remaining life of the primary asset. A loss is measured, at fair value, only if the group fails that test.
Can an impairment loss be reversed?
No. For assets held and used the new carrying amount is the new cost basis, and restoration of a previously recognized loss is prohibited.
Related templates
- ASC 360 Impairment Recoverability Test Workbook
- Fixed Asset Rollforward (Excel)
- Disclosure Checklist: Fair Value Measurements (ASC 820)
- ASC 820 Fair Value Hierarchy Memo
Last updated 11/05/2026. All free templates.