Impairment Testing of Intangible Assets in India
Ind AS 36 Impairment Testing for Goodwill, Intangible Assets and Cash-Generating Units
In today’s reporting environment, unsupported carrying values can quickly attract auditor, board and investor scrutiny. We provide clear, audit-ready and defensible impairment testing under Ind AS 36 for Goodwill, Brands, Software, Technology and Cash-Generating Units. Our analysis combines robust Valuation modelling, market-supported assumptions and sensitivity testing to support accurate recoverable amounts and reliable financial reporting.
Intangible Asset Impairment Testing Experts in India
Elite Valuation is a specialist Valuation and financial advisory firm headquartered in Ahmedabad and supporting companies across India, including Mumbai, Bengaluru, Delhi NCR, Hyderabad, Pune and Chennai. Our impairment testing services are designed for listed companies, large unlisted entities, PE-backed businesses, acquisitive groups and companies holding material intangible assets.
Led by CA Sagar Shah (Ex-EY, IBBI Registered Valuer), we deliver clear and defensible impairment analyses using Value in Use (VIU), Fair Value Less Costs of Disposal (FVLCD), CGU assessment and sensitivity analysis.
Our impairment testing is aligned with Ind AS 36, Ind AS 38, Ind AS 103 and Ind AS 113, with transparent assumptions and Valuation workings designed to support financial reporting, audit review and management decision-making.
Our Specialized Impairment Testing Solutions
We provide end-to-end impairment testing support for Intangible Assets and Cash-Generating Units under Ind AS 36:
Annual vs Trigger-Based Impairment Testing
Impairment Testing requirements depend on the nature of the asset, applicable accounting framework and whether indicators of impairment exist:
- Goodwill:Tested annually under Ind AS 36 and additionally whenever impairment indicators arise.
- Indefinite-Life Intangible Assets: Subject to annual Impairment Testing even when there is no specific impairment indicator.
- Assets Not Yet Available for Use: Tested annually until the Intangible Asset is ready for its intended commercial use.
- Finite-Life Intangible Assets: Generally tested when internal or external indicators suggest that carrying value may not be recoverable.
- Cash-Generating Units (CGUs): Tested where individual assets do not generate sufficiently independent cash inflows.
- AS 28 Applicability: Entities following Accounting Standards assess impairment under AS 28, with requirements differing from the annual testing framework under Ind AS 36.
Cash-Generating Units and Goodwill Allocation Framework
A reliable impairment test begins with the correct CGU structure. A CGU is the smallest group of assets generating cash inflows largely independent of other assets.
- Identify the lowest independent cash inflow level: Do not separate products, plants or branches if their revenues and decisions remain economically interdependent.
- Allocate goodwill from the acquisition date: Assign goodwill to the CGUs expected to benefit from acquisition synergies, even if other acquired assets are allocated differently.
- Follow the management monitoring level: Use the lowest internal monitoring level, without exceeding an operating segment before aggregation under Ind AS 108.
- Include related corporate assets consistently: Allocate shared assets reasonably and consistently, or test them with the smallest related group of CGUs.
- Align the carrying amount and recoverable amount: Use consistent assets, liabilities and cash flows in both the carrying-value schedule and Valuation model.
- Apply the impairment loss in the correct order: Reduce goodwill first, then other CGU assets pro rata, subject to the minimum carrying-value limits.
Impairment Indicator Checklist for Intangible Assets
At each reporting date, management should assess internal and external evidence of possible impairment. The indicators below are a minimum, not an exhaustive list.
- Significant market value decline: Observable value falls more than expected from normal use, amortization or time.
- Adverse market, technology or legal change: Demand, regulation, competition, legal rights or technology moves against the asset.
- Increase in market rates of return: Higher rates or risk premiums materially reduce recoverable amount.
- Market capitalization below net assets: The entity carries net assets above its market capitalization and the cause requires investigation.
- Obsolescence or shortened economic life: Software, technology, a brand or protected right becomes obsolete or has a shorter expected life.
- Adverse change in use or operating structure: A business line becomes idle, is restructured, scaled down, closed or sold earlier than planned.
- Performance below internal expectations: Revenue, margins, customers, utilization or license income falls below the approved plan.
- Loss of critical commercial support: A key customer, license, approval, patent protection or technical capability is lost or weakened.
What Is Impairment Testing of Intangible Assets?
Impairment testing of intangible assets is the financial-reporting process of checking whether the carrying amount of an intangible asset or cash-generating unit exceeds its recoverable amount. Under Ind AS 36, an impairment loss is recognized when the amount recorded in the books cannot be recovered through continued use or disposal.
Goodwill, indefinite-life Intangible Assets and assets not yet available for use are tested at least annually, while finite-life Intangible Assets are generally tested when impairment indicators arise. Testing is performed at the individual asset or CGU level depending on whether independent cash flows can be identified.
Get Expert Impairment Testing Support
When Do You Need Intangible Asset Impairment Testing?
Formal Impairment Testing is required when carrying values may no longer be recoverable or when accounting standards mandate periodic testing:
Free Brand Valuation Guide for Founders, CFOs & Investors (2026)
Includes real-world case studies, royalty benchmarks, and frameworks covering Ind AS 103, Transfer Pricing, FEMA NDI Rules, and Ind AS 36 impairment - for FMCG, pharma, technology, and family business brand Valuations.
Who Needs Impairment Testing Services?
CFOs and finance heads
Listed and large unlisted companies
Boards and audit committees
PE and VC-backed portfolio companies
M&A and integration teams
Statutory auditors and accounting teams
Benefits of Professional Impairment Testing
A structured impairment assessment strengthens financial reporting and supports audit review:
Recoverable Amount Methodologies Used
We apply appropriate Valuation techniques to determine recoverable amount based on the asset, CGU and available evidence:
Value in Use (VIU)
Fair Value Less Costs of Disposal (FVLCD)
Multi-Period Excess Earnings Method (MPEEM)
Relief from Royalty Method (RFR)
Ind AS, Valuation and Audit Framework
We navigate the applicable accounting and audit frameworks to support compliant and defensible Impairment Testing:
- Ind AS 36
Primary framework governing impairment of Goodwill, Intangible Assets and Cash-Generating Units. - AS 28
Governing impairment assessment for entities following the Accounting Standards framework. - Ind AS 38 & AS 26
Governing recognition, useful life and impairment considerations for Intangible Assets. - Ind AS 113
Providing the fair value framework where recoverable amount is based on FVLCD. - SA 540
Governing audit evaluation of accounting estimates, assumptions and related Valuation inputs.
Our Intangible Asset Impairment Testing Process
We follow a rigorous five-step workflow to deliver clear, audit-ready and defensible impairment assessments:
Requirement Analysis & Scoping
We confirm the assets, reporting date, applicable framework, CGUs and audit requirements
CGU & Carrying Value Assessment
We review CGU allocation, Goodwill, carrying amounts, historical performance and impairment indicators.
Recoverable Amount Modelling
We determine recoverable amount using VIU, FVLCD or other relevant Valuation techniques and test key assumptions.
Sensitivity & Impairment Analysis
We assess headroom, downside scenarios and calculate any required impairment loss and allocation.
Final Reporting & Audit Support
We deliver the final report with documented assumptions, calculations and supporting workings for financial reporting and audit review.
What You Receive: Impairment Testing Deliverables
Our deliverables are structured for management review, financial reporting and audit scrutiny:
Why Choose Elite Valuation?
We are uniquely positioned to handle high-stakes Brand Valuations in India:
- Ex-Big 4 Pedigree
Founder Sagar RV Shah’s background at Ernst & Young (EY) ensures global standards of ethics and documentation. - Tripartite Qualification
We combine CA, CS, and Registered Valuer expertise to cover tax, legal, and finance angles simultaneously.
- Defensive Reporting
Our reports are engineered to minimize queries from tax officers, auditors, and regulators. - Speed & Agility
We offer the quickest response times without compromising analysis depth and providing quality of Big 4 firms.
Our Clients
Where Our Expertise Is Applied
Trusted by Leaders.
Proven by Results.
What founders, CFOs, and investors say about working with Elite Valuation.
"The team at Elite Valuation was very helpful in our multiple Valuations. CA Sagar Shah personally ensured the Valuation was objective and clearly explained to us, which helped fix the gap during negotiations. They are responsive, professional, and truly understand the complexities of M&A. Highly recommend their expertise for any deal."
"We've been working with Elite Valuation for our ESOPs for a few years now, and they've been great. They handle the complex regulatory side of things very smoothly, making sure our reports are always audit-ready and easy to understand. The team is professional and always help us meet a deadline, and they really know how to manage equity Valuations for larger companies. Highly recommended if you need a reliable partner for compliance."
"Elite Valuation has been our go-to firm for our all type of Valuations be ie Merger, ESOP, Preferential Valuation of listed companies. They understand the nuances of different regulations, complex Valuation modelling and always ensure the assumptions are well-supported and defensible during audits. Their consistency and reliability make them a trusted partner for all of our Valuation requirements ."
"We engaged Elite Valuation for a merger Valuation involving more than 12 group companies, and the experience was seamless. Mr Sagar Shah and his team built a robust model that satisfied all stakeholders. Their understanding of regulatory requirements and Valuation complexities made them an invaluable partner throughout the process."
"Sagar and his team understand ESOP and Business Valuation and compliance very well. What we like most is that they take the time to explain the numbers and the logic behind them, which has been very useful for us internally. It feels like working with a team that genuinely knows the space well."
"We issued compulsorily convertible debentures as part of a funding round, and Elite Valuation provided a robust Valuation that addressed all regulatory and stakeholder requirements. Their familiarity with instrument-specific Valuation methodologies and SEBI requirements was very evident."
"As a first-time fundraiser, we had no idea where to begin. Elite Valuation built an investor-grade financial model and a detailed Investor Memorandum for us, while guiding us on exactly what institutional investors look for. Mr. was patient, responsive, and made the entire process approachable. We walked into every investor meeting fully confident. Truly a reliable partner for anyone navigating fundraising for the first time."
"We have engaged Elite Valuation across a range of assignments, including share issuances, transfers, ESOPs, preferential allotments, rights issues, and merger Valuations. Their execution has consistently reflected strong technical depth and a clear understanding of regulatory frameworks. The team delivers well-structured, defensible Valuation reports with a high level of precision and professionalism. Their ability to manage complex mandates within tight timelines, without compromising on analytical rigor, is particularly noteworthy. Elite Valuation combines technical expertise with commercial insight, making them a dependable partner for Valuation engagements. We highly recommend their services.""
"Over the last few years, we've engaged Elite Valuation for multiple Valuation projects for multiple of our clients. Their reports are always comprehensive, well-documented, and fully aligned with regulatory requirements under Income-tax and FEMA. CA Sagar Shah's insights were instrumental in ensuring a smooth process and his expertise added tremendous value throughout. Highly recommended for multinational enterprises and large firms."
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