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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
, see all updates

FRS 102: Impairment

Is a financial asset impaired?

A company is required to assess at each balance sheet date whether there is any objective evidence that a financial asset or group of assets may be impaired. FRS 102 sets out indicators that the asset holder would need to consider, such as whether the issuer is experiencing significant financial difficulties, whether a default or breach of contract has already occurred, or whether an active market for that asset has disappeared because of financial difficulties. A downgrade in the issuer’s credit rating is not, by itself, evidence of impairment.

FRS 102 requires that an entity assess the following financial assets for impairment individually:

(i) All equity instruments regardless of significance

(ii) Other financial assets that are individually significant

All other financial assets may be assessed individually or on a group basis where they have similar credit risk characteristics.

There is an example at CFM21680.