Impairing Fixed Assets in M3 BE

This document explains how to impair the company's fixed assets based on the International Accounting Standards (IAS 36) adopted by the Council of the European Union.

Terms in M3

The term non-current assets in IAS 36 is synonymous with fixed assets in M3 BE.

The term carrying amount in IAS 36 is synonymous with the recorded amount in M3 BE; that is, the value of the fixed asset in the balance sheet. The recorded amount represents the acquisition cost minus depreciations minus any previous impairment losses.

The term recoverable amount in IAS 36 is synonymous with replacement value in M3 BE.


The company's fixed assets are carried at no more than their recoverable amount.

You can review the changes resulting from the impairment of each asset per period by selecting option 11='Display FA value per period' for the value type of the replacement value in 'Fixed Asset. Connect Value Types' (FAS003/B). The option starts 'FA Value. Display Period' (FAS220).

Amounts for value types connected to the fixed assets in 'Fixed Asset. Connect Value Types' (FAS003) are updated.

The general ledger is updated with the extraordinary depreciation: one credit transaction (based on accounting rule FA30–520) and one debit transaction (based on accounting rule FA30–530).

Before You Start

Follow These Steps

  1. Identify Recoverable Amounts

    Identify the recoverable amount as either the net selling price or the value in use for each fixed asset, whichever is greater. The calculations and decisions are made outside of M3 when you get an indication that the recoverable amounts have been changed or when you perform the company's year-end routines.

  2. Update Recoverable Amounts in M3

    Update the recoverable amount in one of the following ways:

    • Run 'Annual Run. Open' as part of your year-end routines to calculate the replacement cost based on the cost of capital method selected for the fixed asset
    • Update the replacement value manually for each fixed asset in 'Fixed Asset. Connect Value Types' (FAS003).
  3. Identify Fixed Assets to Be Impaired

    Identify the fixed assets whose carrying amount is now higher than the recoverable amount, by creating a report in 'Fixed Asset. Print Values' (FAS510). The report must be based on a column template designed for impairment tests (refer to the Before Starting section). Based on the report, decide whether or not an impairment in the form of an extraordinary depreciation is necessary.

    You can also use the fixed asset balance file, 'Fixed Asset Display' (FAS200), to display the carrying amount and the replacement value online.

  4. Depreciate Carrying Amounts

    Record the impairment by creating an extraordinary depreciation in 'FA Depreciation. Create Extraordinary' (FAS140) for each fixed asset affected. You enter the new recoverable amount in the 'Replacement value' field.

    You can reverse the extraordinary depreciation, either partially or entirely, by entering a negative value in the 'Extraordinary depreciation' field in (FAS140). However, the reversed depreciation cannot be greater than the original depreciation.

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