# AS 28: Indicators of Impairment — When Must You Test?
## The Trigger Principle
An impairment test must be performed whenever there is an indication that an asset may be impaired.
> Key insight: Identifying an indicator does NOT mean the asset is impaired. It only means you must conduct the test. The test result determines whether any write-down is needed.
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## Mandatory Annual Test (No Indicator Required)
Three categories must be tested every year regardless of whether any indicator exists:
1. Goodwill acquired in a business combination
2. Intangible assets with indefinite useful life
3. Intangible assets not yet available for use
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## External Indicators
| Indicator | Mechanism |
|---|---|
| Asset's market value has declined significantly | CA may exceed realisable value |
| Significant adverse changes in technology, markets, economy, or law | Future economic benefits are reduced |
| Market interest rates have risen | Higher discount rate → lower PV → lower VIU |
Interest Rate Effect on VIU (illustration):
Higher market rates → higher discount factor → lower present value of future cash flows → VIU falls → impairment becomes more likely.
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## Internal Indicators
| Indicator | Mechanism |
|---|---|
| Physical damage to the asset | Reduced service potential |
| Asset has become idle or is planned for disposal | Cash flows expected to stop |
| Actual performance worse than originally projected | VIU based on projections is overstated |