The recoverability test is the first step in impairment testing under both IFRS and U.S. GAAP.

Question

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Under U.S. GAAP, the recoverability test is used to determine if an asset's carrying amount may not be recoverable, which is a step in the impairment testing process. However, under IFRS, impairment testing begins with an assessment of indicators of impairment, and if such indicators exist, the asset's recoverable amount is compared directly to its carrying amount without a separate recoverability test.

The Recoverability Test Is the First Step in Impairment Testing