Impairment testing of assets is carried out when there are indicators that the value of an asset may be impaired. These indicators may include, but are not limited to, the following:

• Reduced use of the asset

  If an asset is no longer used in the same way or does not generate cash flows as expected.

• Changes in economic conditions or regulations

  Significant changes in the economic environment, legal regulations, or technology that may negatively affect the value of an asset.

• Performance worse than anticipated

  If the performance of an asset (e.g., equipment or property) is below the expected level, this suggests a decline in its value.

• Physical damage

  If one or more assets suffer significant damage that affects their use or performance and/or the performance of other assets.

If such indications exist, the company must perform an impairment test to compare the carrying amount of the asset with its recoverable amount (the higher of its value in use and its fair value less the costs to sell). If the carrying amount exceeds the recoverable amount, an impairment loss is recognized.