Asset Impairment Training for Staff Accountants: Build ASC 360 Judgment From Trigger Event to Write-Down

By Vincent Howard, CPA | Managing Partner, Howard, Howard and Hodges | SkillAbility for Accounting Firms

Last updated: September 2, 2026  |  38-minute read

What Is Asset Impairment Training for Staff Accountants?

Asset impairment training develops a staff accountant’s ability to determine when long-lived assets may not be recoverable, define the appropriate asset group, perform the ASC 360 recoverability test, measure any required write-down, and document the accounting consequences from trigger through disclosure.

ASC 360 can apply to long-lived assets such as:

• property, plant, and equipment,
• finite-lived intangible assets,
• right-of-use assets in applicable lessee impairment analyses,
• capitalized software or other long-lived assets when no more specific impairment model applies,
• long-lived disposal groups classified as held for sale.

The held-and-used model is often misunderstood because it contains two different measurement concepts.

Step 1 asks whether the asset group is recoverable through its expected undiscounted cash flows.

Step 2—only if Step 1 fails—measures the loss using fair value.

This guide connects directly to Fair Value Accounting Training for Staff Accountants, Goodwill Impairment Training for Accountants, Business Combination Accounting Training for Staff Accountants, Lease Accounting Training for Staff Accountants, and Fixed Asset Accounting Training for Staff Accountants.

Why Asset Impairment Is a Judgment-Development Topic

I have practiced public accounting since 1990, founded my accounting firm in 1993, and helped grow Howard, Howard and Hodges from three people to approximately 50 staff. Since 2020, I have built SkillAbility around a recurring development issue: staff are often taught how to post a write-down after a manager or valuation specialist has already determined the accounting.

ASC 360 is a good example of why that is not enough.

Before the journal entry exists, somebody has to decide:

• whether there is a trigger,
• which assets are tested together,
• which liabilities belong in the asset group,
• what the primary asset is,
• how long cash flows should be projected,
• whether forecasts reflect the entity’s actual expected use,
• whether a planned sale has crossed into held-for-sale classification,
• and whether other asset classes must be impaired first.

A fair-value specialist can estimate fair value.

The specialist does not replace the accountant’s responsibility for the recoverability test, asset-group carrying amount, impairment sequence, loss allocation, new depreciation basis, or disclosure.

What Is Current in ASC 360 in 2026?

Deloitte’s latest comprehensive Impairments and Disposals of Long-Lived Assets and Discontinued Operations Roadmap is dated November 2025 and remains current in 2026. It covers ASC 360-10 held-and-used assets, held-for-sale disposal groups, other disposals, ASC 205-20 discontinued operations, presentation, disclosures, and SEC considerations.

KPMG’s current integrated Impairment of Nonfinancial Assets Handbook is dated September 2025 and remains effective immediately. KPMG specifically combines ASC 350-20 goodwill, ASC 350-30 indefinite-lived intangibles, and ASC 360 long-lived assets because impairment models have different units of account and must sometimes be applied in a specific sequence.

KPMG also issued a May 2026 Discontinued Operations & Held-for-Sale Disposal Groups Handbook, adding current guidance and clarifications on disposals, write-down losses, and related matters.

Chart: Where ASC 360 Judgment Concentrates

SkillAbility training heat map—not a FASB ranking. Actual risk depends on asset use, cash-flow independence, forecast uncertainty, useful life, disposal plans, leases, market conditions, and the other impairment models that interact with ASC 360.

The IMPAIR READY Framework

I — Which Assets Are in ASC 360?

ASC 360-10 applies to long-lived assets that are not subject to a more specific impairment model.

Common in-scope held-and-used assets

• Buildings and leasehold improvements
• Machinery and equipment
• Furniture and fixtures
• finite-lived customer relationships
• finite-lived technology, software, trade names, and other amortizing intangibles when within ASC 360’s scope
• right-of-use assets in applicable lessee impairment analyses

Assets that can sit in the asset group but use another impairment model

An ASC 360 asset group can contain items that are not themselves written down under ASC 360.

Examples may include:

• Accounts receivable
• inventory
• indefinite-lived intangible assets
• goodwill
• financial instruments
• certain liabilities related to the asset group

Those items can affect the asset group’s carrying amount and cash flows, but they may need to be tested under their own GAAP first.

Intent changes the model

M — Triggering Events: When Does ASC 360 Recoverability Testing Begin?

Long-lived assets classified as held and used are not tested on a mandatory annual schedule.

ASC 360 testing begins when events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable.

Six core ASC 360 triggering-event categories

1. Significant decrease in market price.
2. Significant adverse change in the extent/manner of use or physical condition.
3. Significant adverse change in legal factors or the business climate, including adverse regulatory action.
4. Accumulated acquisition or construction costs materially above expectations.
5. Current operating/cash-flow loss plus a history or forecast of continuing losses.
6. Expectation that it is more likely than not the asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

Additional real-world triggers staff should recognize

• Major customer cancellation
• closure or consolidation of a location
• technology obsolescence
• major physical damage
• new regulation restricting use
• significant vacancy increase
• planned sublease or downsizing
• loss of a license or permit
• product-line discontinuation
• tariff or supply-chain changes that materially alter margins
• restructuring that shortens an asset’s expected use
• going-concern stress

A trigger is not automatically an impairment

The trigger means: perform the recoverability analysis.

It does not mean:

A triggered asset group can pass the undiscounted cash-flow test and therefore have no ASC 360 impairment.

Example: store closure plan

A retailer decides to close 20 locations over 18 months.

Potential implications include:

• triggering event for leasehold improvements and ROU assets,
• possible change in asset-group determination,
• shorter useful lives,
• possible abandonment analysis,
• forecast changes,
• recoverability test.

Staff should not wait for the physical closure date before evaluating impairment.

P — Build the Asset Group at the Lowest Level With Largely Independent Cash Flows

ASC 360 does not normally test each machine, computer, leasehold improvement, or finite-lived intangible separately.

Held-and-used long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows from other assets and liabilities.

This is the asset group.

Example: restaurant chain

A restaurant company operates 80 locations.

If each location generates identifiable cash flows that are largely independent, the store location may be the appropriate asset-group level.

It would usually be inappropriate to combine a chronically loss-making store with profitable stores merely to avoid a recoverability failure when the stores generate largely independent cash flows.

Example: manufacturing plant

One production line cannot generate revenue independently because:

• it feeds a second production line,
• the output has no external market,
• shared equipment is necessary to finish the product.

The relevant asset group may be the plant or integrated production system rather than the individual line.

Possible asset-group components

• PP&E
• finite-lived intangible assets
• ROU assets
• working capital assets/liabilities
• other operating assets/liabilities
• goodwill, when applicable under the testing sequence and grouping rules

Liabilities require consistent treatment

Operating liabilities can sometimes be included when they relate to assets in the group.

Financing liabilities are generally different.

The key control is consistency:

Otherwise the model can artificially pass or fail recoverability.

Asset groups can change

A restructuring can make previously shared cash flows independent.

A sublease can carve a portion of office space into a separate asset group.

A divestiture can change the grouping of remaining assets.

Staff should not simply copy last year’s asset-group map.

A — Identify the Primary Asset and the Cash-Flow Estimation Period

The recoverability test uses cash flows over the remaining useful life of the asset group.

ASC 360 determines that period by reference to the group’s primary asset.

The primary asset is the principal depreciable tangible asset or amortizable intangible asset that is the most significant component from which the asset group derives its cash-flow-generating capacity.

The primary asset cannot be

• land,
• goodwill,
• an indefinite-lived intangible asset,
• another nonamortizing/nondepreciating item.

Factors used to identify the primary asset

• Would the other assets have been acquired without it?
• How much investment would be required to replace it?
• How does its remaining useful life compare with other assets?
• How important is it to the group’s cash-flow-generating capacity?

Example

An asset group contains:

• Building: remaining useful life 18 years
• Specialized production line: remaining life 8 years
• Customer relationship: remaining life 5 years
• Land: indefinite

The building has the longest life.

But if the specialized production line is the principal asset that generates the group’s economics and the building could readily be repurposed, the production line could be the primary asset.

If the production line is the primary asset, the recoverability period may be based on its eight-year remaining life rather than the building’s 18 years.

I — Follow the Correct Impairment-Testing Sequence

When one event affects multiple types of assets, the order of testing matters because earlier write-downs change the carrying amount used in later tests.

Typical held-and-used sequence

Examples of assets that may be tested first under their own models include:

• inventory,
• receivables / CECL assets,
• financial instruments,
• other assets subject to specific impairment guidance.

Then indefinite-lived intangibles are tested.

Then the ASC 360 long-lived asset group.

Then goodwill.

This sequence prevents an entity from using goodwill or another asset’s value to shield a long-lived asset that is itself not recoverable.

Coordinate with Goodwill Impairment Training for Accountants, Inventory Accounting Training for Staff Accountants, and CECL Training for Accountants.

R — Step 1: The Undiscounted Recoverability Test

For a triggered asset group held and used, ASC 360 first asks:

If no, the asset group is recoverable.

No ASC 360 impairment is recognized.

If yes, recoverability fails and the entity proceeds to fair value.

This is not a fair-value test

Step 1 uses:

• undiscounted cash flows,
• the entity’s own expected use of the asset group,
• cash flows through the remaining life of the primary asset,
• eventual disposition proceeds.

That means Step 1 can pass even when fair value is below carrying amount.

Example

Asset-group carrying amount: $12.0M

Undiscounted expected cash flows: $13.2M

Estimated fair value: $10.5M

Result:

No ASC 360 impairment.

The fact that fair value is only $10.5M does not override the passed recoverability test for a held-and-used asset group.

R — Build Supportable Recoverability Cash Flows

The recoverability test is only as reliable as the cash-flow population.

Cash flows should be directly associated with the asset group

Include cash inflows and outflows that are:

• directly associated with the asset group, and
• expected to arise from its use and eventual disposition.

Staff should reconcile projections to:

• approved budgets,
• recent actual performance,
• production capacity,
• customer contracts,
• expected pricing,
• labor and material costs,
• maintenance capital,
• planned shutdowns,
• salvage or disposition assumptions.

Entity-specific assumptions belong in Step 1

Unlike fair value, the recoverability test reflects the entity’s expected use of the asset group.

If management plans to continue operating a specialized asset in a way that differs from how a market participant might use it, Step 1 can reflect management’s expected course of action—assuming that course is supportable as of the testing date.

Interest expense is generally excluded

The recoverability model is intended to assess the operating asset group, not produce different results based solely on capital structure.

Accordingly, future interest expense generally is not included merely because debt financed the assets.

Alternative courses of action

If management is genuinely considering multiple recovery paths, such as:

• continue operating,
• sell in three years,
• close and abandon,

a probability-weighted cash-flow approach can be useful when the outcome is uncertain.

Facts at the testing date

Cash flows should reflect facts and circumstances existing at the date of the recoverability test.

Later information can help explain or validate assumptions, but staff should not silently insert hindsight that was not available at the measurement date.

Forecast discipline

R + E — Step 2: Measure Fair Value and the Impairment Write-Down

If Step 1 fails, ASC 360 moves from an entity-specific recoverability concept to an ASC 820 fair-value concept.

Fair value uses market-participant assumptions.

Common valuation approaches include:

• discounted cash flow,
• market multiples,
• comparable sales,
• cost approach for appropriate specialized assets,
• multiple techniques when warranted.

Coordinate with Fair Value Accounting Training for Staff Accountants.

Step 1 forecast and Step 2 valuation may differ

This is expected.

Step 1:

• undiscounted,
• entity-specific expected use.

Step 2:

• market-participant fair value,
• discounting and market risk,
• ASC 820 exit-price concepts.

A — Allocate the Impairment Loss to Individual Long-Lived Assets

The asset group is the testing unit, but the individual long-lived assets remain separate accounting units.

Therefore, a recognized ASC 360 impairment loss is allocated to the long-lived assets within the group.

General allocation rule

Allocate the impairment loss on a pro rata basis using relative carrying amounts of the long-lived assets within ASC 360’s scope.

However:

What does not simply receive pro rata ASC 360 loss?

Assets subject to other accounting models generally should not receive an ASC 360 allocation as though they were ordinary long-lived assets.

Examples can include:

• cash and receivables,
• inventory,
• goodwill,
• indefinite-lived intangibles,
• financial instruments.

Example

After other applicable impairment testing, a failed asset group has:

• Building: $4.0M carrying amount
• Equipment: $2.0M
• finite-lived customer relationship: $1.0M
• working capital: $1.0M

Total group carrying amount = $8.0M.

Fair value = $6.5M.

Impairment loss = $1.5M.

The $1.5M is allocated among the $7.0M of ASC 360 long-lived assets—not automatically to working capital.

Relative carrying amounts:

• Building: 4/7
• Equipment: 2/7
• Customer relationship: 1/7

Before considering individual fair-value floors:

• Building: $857,143 loss
• Equipment: $428,571 loss
• Customer relationship: $214,286 loss

If the equipment’s determinable fair value means it can absorb only $250,000 of loss, the excess allocation must be reassigned consistently to the other long-lived assets without pushing any asset below an applicable fair-value floor.

A — New Cost Basis, Revised Depreciation, and No Reversal

Once an impairment loss is recognized on a held-and-used long-lived asset, its adjusted carrying amount becomes its new cost basis.

For depreciable or amortizable assets:

Staff should update:

• fixed-asset subledger,
• accumulated depreciation/amortization presentation,
• remaining useful life,
• salvage value,
• future depreciation/amortization,
• tax basis / deferred taxes where relevant.

Held-and-used impairment cannot be reversed

If market conditions improve a year later:

do not reverse the previously recognized ASC 360 impairment.

The impaired asset continues from its new cost basis.

D — Held-for-Sale Accounting Is a Different Model

A plan to sell an asset does not automatically make it held for sale.

ASC 360 requires specific criteria.

Core held-for-sale criteria include

• Management with authority commits to a plan to sell.
• The asset/disposal group is available for immediate sale in its present condition, subject to usual/customary terms.
• An active program to locate a buyer and complete the plan has begun.
• The sale is probable.
• Completion is generally expected within one year, subject to limited exceptions.
• The asset is actively marketed at a reasonable price relative to current fair value.
• Actions required to complete the plan indicate it is unlikely that significant changes or withdrawal will occur.

Measurement

Once the criteria are met:

Long-lived assets classified as held for sale are not depreciated or amortized while held for sale.

Subsequent changes

The disposal group is remeasured each reporting period for changes in fair value less cost to sell.

Subsequent gains can be recognized to recover prior write-downs, but the adjusted carrying amount cannot exceed the carrying amount that existed when the asset was initially classified as held for sale.

Held for sale is not automatically discontinued operations

ASC 205-20 imposes a separate test for whether a disposal represents a strategic shift with a major effect on operations and financial results.

Abandonment Is Not the Same as Held for Sale

A long-lived asset to be abandoned remains classified as held and used until it actually ceases to be used.

That matters because the company continues to apply the held-and-used impairment model before abandonment.

Planned abandonment can trigger two accounting responses

1. Recoverability testing, because planned early disposal can be an impairment indicator.
2. Useful-life revision, because the asset will be used for a shorter period.

Example

A company decides in September that a factory will close the following June after existing customer orders are fulfilled.

The factory has not yet been abandoned.

Staff should consider:

• ASC 360 triggering event,
• recoverability over the shortened expected use,
• revised depreciation through June,
• salvage value,
• closure liabilities under other guidance.

Temporary idling is not abandonment

A plant idled for three months because of supply shortages is not automatically abandoned.

The temporary shutdown can still be an impairment indicator depending on the economics, but staff should not apply abandonment accounting merely because the asset is temporarily unused.

ROU Assets, Subleases, and Real-Estate Rationalization

Right-of-use assets recorded by lessees under ASC 842 can be subject to the ASC 360 impairment model.

Common real-estate impairment scenarios

• Corporate office downsizing
• store closure
• warehouse consolidation
• subleasing unused space
• business-line exit
• hybrid-work reduction in office use

A changed use of leased property can:

• create an impairment trigger,
• change the asset-group level,
• require an ASC 360 recoverability test,
• affect subsequent ROU-asset accounting.

One subtle point matters:

A market-rate change alone does not necessarily trigger a lease-term reassessment under ASC 842, but a significant market-price or asset-use change can still be an ASC 360 impairment indicator.

Coordinate with Lease Accounting Training for Staff Accountants.

Worked Example 1: From Trigger Event to ASC 360 Write-Down

Assume a manufacturer has an asset group supporting one product line.

Trigger

A major customer representing 30% of unit volume exits the market.

Management forecasts:

• lower unit volume,
• lower margins,
• reduced utilization,
• earlier retirement of the specialized production equipment.

That is a clear reason to evaluate recoverability.

Asset-group carrying amount after testing other applicable assets first

Primary asset

The specialized production equipment is the group’s primary asset.

Its revised remaining useful life is five years.

Step 1 — undiscounted cash flows

Expected net cash flows from use and eventual disposition:

• Year 1: $1.30M
• Year 2: $1.20M
• Year 3: $1.10M
• Year 4: $1.00M
• Year 5 including disposition: $1.60M

Step 2 — fair value

An ASC 820 valuation using market-participant cash flows and market evidence produces asset-group fair value of $5.80M.

Allocate the loss

The $1.70M loss is allocated to the long-lived assets within ASC 360’s scope based on relative carrying amounts, subject to individual fair-value floors where determinable.

Working capital does not simply absorb a pro rata ASC 360 loss.

After impairment

Each impaired asset has a new cost basis.

Future depreciation/amortization is recalculated prospectively.

The $1.70M held-and-used impairment cannot later be reversed if the product market improves.

Worked Example 2: Held-for-Sale Disposal Group

Assume management commits to sell a regional distribution center and associated business assets.

All ASC 360 held-for-sale criteria are met on September 30.

Carrying amount before held-for-sale measurement

• Building and improvements: $4.8M
• Equipment: $0.9M
• Other assets/liabilities included in disposal group after applicable prior testing: net $0.3M

Fair value based on market evidence: $5.6M

Estimated cost to sell: $0.2M

Once held for sale:

• the disposal group is carried at $5.4M,
• depreciation/amortization on the long-lived assets stops,
• fair value less cost to sell is reassessed in later periods,
• the company separately evaluates whether the disposal qualifies as discontinued operations under ASC 205-20.

What if fair value later rises?

If fair value less cost to sell later increases to $5.8M, the company may recognize a gain to reverse part of the prior held-for-sale write-down, subject to the applicable ceiling.

That is different from held-and-used impairment, where reversal is prohibited.

A Quarter-End ASC 360 Impairment Workflow

Build a long-lived asset trigger register

For each significant asset group, maintain:

• Asset-group name
• business owner
• primary asset
• remaining useful life
• last impairment test date
• recent actual vs. forecast results
• significant customer/product exposures
• market-price evidence
• physical condition
• legal/regulatory changes
• planned sale / closure / abandonment status
• lease and sublease changes
• trigger conclusion
• reviewer

That turns impairment monitoring into a close control instead of an annual “did anything bad happen?” email.

ASC 360 Self-Review Checklist Before Manager Review

• Did I identify every significant long-lived asset class potentially within ASC 360?
• Did I distinguish held-and-used assets from held-for-sale disposal groups?
• Did I identify planned abandonment or other disposal paths separately from sale?
• Did I avoid treating a temporarily idled asset as automatically abandoned?
• Did I identify ROU assets that may be part of an ASC 360 asset group?
• Did I identify assets subject to more specific impairment models?
• Did I identify inventory that must be tested under its own guidance first?
• Did I identify receivables / financial assets requiring separate impairment analysis?
• Did I identify indefinite-lived intangibles requiring ASC 350 testing?
• Did I identify goodwill that may require later ASC 350 testing?
• Did I review significant decreases in asset or asset-group market price?
• Did I review adverse changes in asset use?
• Did I review physical damage or deterioration?
• Did I review adverse legal or regulatory changes?
• Did I review adverse changes in business climate?
• Did I review construction or acquisition cost overruns?
• Did I review current operating/cash-flow losses plus historical or projected losses?
• Did I review expected sale/disposal significantly before original useful life?
• Did I review major customer cancellations or postponements?
• Did I review technology obsolescence?
• Did I review vacancy / rental-income deterioration?
• Did I review restructuring plans and location closures?
• Did I document why identified events do or do not constitute an impairment trigger?
• Did I avoid equating a trigger with an automatic impairment charge?
• Did I define the asset group at the lowest level with largely independent identifiable cash flows?
• Did I avoid combining loss-making groups with profitable groups merely because they share management?
• Did I avoid splitting assets that cannot generate largely independent cash flows?
• Did I document changes from the prior-period asset-group structure?
• Did I identify operating liabilities included in the asset group?
• Did I treat liabilities and their related cash flows consistently?
• Did I avoid introducing capital-structure differences into the recoverability test through interest expense?
• Did I identify the primary asset?
• Is the primary asset a depreciable tangible or amortizable intangible asset?
• Did I avoid using land, goodwill, or an indefinite-lived intangible as the primary asset?
• Did I evaluate which asset principally drives cash-flow-generating capacity?
• Did I evaluate replacement investment?
• Did I evaluate relative remaining useful lives?
• Did I revise the primary asset’s useful life if the trigger changes expected use?
• Did I use the primary asset’s remaining life to determine the cash-flow estimation period?
• Did I include eventual disposition cash flows at the end of the applicable period?
• Did I follow the proper order of impairment testing?
• Did prior impairment write-downs update the carrying amount used in the ASC 360 test?
• Did I build the recoverability test using undiscounted cash flows?
• Did I use the entity’s expected use of the asset group for Step 1?
• Did I include cash flows directly associated with use and eventual disposition?
• Did I reconcile cash flows to budgets and recent actual performance?
• Did I incorporate current customer losses and pricing changes?
• Did I incorporate current labor/material/tariff/supply-chain cost expectations where relevant?
• Did I include maintenance expenditures needed to generate the forecast cash flows?
• Did I avoid unsupported revenue growth?
• Did I avoid unsupported margin recovery?
• Did I avoid extending cash flows beyond the appropriate primary-asset life?
• Did I consider probability-weighted scenarios when genuinely alternative courses of action exist?
• Did I use facts and circumstances available as of the testing date?
• Did I distinguish subsequent evidence from hindsight?
• Did I compare total undiscounted cash flows with the asset-group carrying amount?
• If undiscounted cash flows exceed carrying amount, did I stop the ASC 360 write-down analysis?
• Did I avoid recognizing impairment solely because fair value is below carrying amount when Step 1 passes?
• If Step 1 failed, did I measure fair value under ASC 820?
• Did I use market-participant assumptions in Step 2?
• Did I understand why the Step 1 and Step 2 cash flows may differ?
• Did I reconcile the fair-value model to the same asset group used in recoverability?
• Did I calculate impairment as carrying amount less fair value?
• Did I identify the long-lived assets eligible to receive the ASC 360 loss allocation?
• Did I allocate loss based on relative carrying amounts?
• Did I apply individual fair-value floors when fair value is determinable without undue cost and effort?
• Did I avoid allocating ASC 360 loss directly to assets governed by other impairment models?
• Did I calculate new cost bases after impairment?
• Did I update the fixed-asset/intangible/lease subledgers?
• Did I revise remaining useful lives and salvage values where facts changed?
• Did I recalculate future depreciation/amortization prospectively?
• Did I avoid reversing prior held-and-used impairment after a recovery in value?
• For a planned sale, did I evaluate every held-for-sale criterion?
• Did authorized management commit to the sale plan?
• Is the asset available for immediate sale in present condition?
• Has an active buyer-search program begun?
• Is the sale probable?
• Is completion generally expected within one year unless a permitted exception applies?
• Is the asset marketed at a price reasonable relative to current fair value?
• Is it unlikely the plan will significantly change or be withdrawn?
• Did I measure a qualifying HFS disposal group at lower of carrying amount or fair value less cost to sell?
• Did I stop depreciation/amortization once HFS classification was achieved?
• Did I remeasure fair value less cost to sell in subsequent periods?
• Did I cap subsequent recovery at the applicable prior carrying amount ceiling?
• Did I separately evaluate discontinued-operations presentation?
• For abandonment, did I keep the asset held and used until it ceased to be used?
• Did I revise useful life and salvage value for planned abandonment?
• Did I distinguish temporary idling from abandonment?
• For leased property, did I coordinate ASC 842 reassessment and ASC 360 impairment requirements?
• Did impairment expense tie to the income statement?
• Did the remaining asset balances tie to the balance sheet?
• Did I prepare required impairment/disposal disclosure support?
• Did I explain the facts and circumstances leading to the impairment?
• Did I document the amount of impairment loss and affected financial-statement line items?
• Did I document the method used to determine fair value where required?
• Can another accountant reproduce the trigger, asset group, Step 1 test, Step 2 valuation, allocation, and new basis without rebuilding my work?

100-Point ASC 360 Readiness Scorecard

Suggested readiness bands

• 90–100: Ready to own defined recurring ASC 360 impairment workstreams with normal manager/valuation review.
• 82–89: Generally review-ready; targeted coaching remains in asset grouping, cash-flow assumptions, or held-for-sale classification.
• 72–81: Controlled ownership with manager checkpoints before recoverability and disposal conclusions are finalized.
• Below 72: Continue structured ASC 360 practice.

Override the numerical score for intentional over-aggregation to avoid impairment, fabricated cash-flow support, hidden triggering events, premature held-for-sale classification, manipulated disposal assumptions, or material impairment plugs.

A 30/60/90-Day Asset Impairment Training Plan

Days 1–30: Trigger before math

Use scenarios involving:

• loss-making stores,
• equipment obsolescence,
• major customer loss,
• cost overrun,
• regulatory restriction,
• planned closure.

Require staff to identify the accounting trigger and the asset-group level before opening a valuation model.

Days 31–60: Build Step 1 correctly

Give staff:

• historical results,
• approved forecast,
• primary-asset life,
• working capital,
• maintenance capex,
• salvage assumptions.

Require them to prove which cash flows belong in the recoverability test.

Days 61–90: Change management intent

Add:

• sale plan,
• abandonment plan,
• temporary idling,
• sublease,
• disposal group,
• possible discontinued operations.

Use Scenario-Based Training for Accountants so staff learn to route changed facts into the right accounting model.

15 Realistic ASC 360 Training Scenarios

1. Fair value fell but Step 1 passes

Fair value is 15% below carrying amount, but undiscounted cash flows exceed carrying amount. Staff concludes no held-and-used impairment.

2. Loss-making store hidden in a region

The company tests 20 stores together even though each store has largely independent cash flows. Staff challenges over-aggregation.

3. One production line tested by itself

The line cannot create saleable output without other shared equipment. Staff identifies a broader asset group.

4. Land chosen as primary asset

Staff corrects the analysis because land has no finite depreciable life for the ASC 360 primary-asset concept.

5. Building with longest life assumed to be primary

Specialized equipment actually drives the group’s economics. Staff uses the primary-asset factors instead of simply picking the longest life.

6. Goodwill tested before long-lived assets

A broad economic trigger affects the business. Staff applies the proper impairment sequence so ASC 360 adjustments occur before goodwill.

7. DCF used as Step 1 without modification

The model uses market-participant assumptions and discounted cash flows. Staff rebuilds the recoverability test using entity-specific undiscounted cash flows.

8. Forecast assumes recovery with no evidence

Management restores margins to historical highs despite customer loss and higher supply costs. Staff challenges the cash-flow support.

9. Impairment allocated to inventory

The asset group includes working capital, but the ASC 360 loss is allocated only to eligible long-lived assets after other models are applied.

10. Individual asset pushed below known fair value

Pro rata allocation writes equipment below a readily determinable fair value. Staff applies the fair-value floor.

11. Prior impairment reversed after market recovery

Staff prevents reversal of a held-and-used ASC 360 impairment and continues depreciation from the new basis.

12. Sale plan announced but no active buyer search

Management says the property is “held for sale,” but ASC 360 criteria are incomplete. Staff keeps held-and-used classification.

13. Qualifying held-for-sale asset keeps depreciating

Staff stops depreciation when all held-for-sale criteria are met.

14. Factory scheduled to close is written to zero immediately

The factory will operate nine more months. Staff keeps it held and used, tests recoverability, and revises depreciation over the shortened life.

15. Vacant office is treated as abandoned

The office is temporarily unused while management seeks a subtenant. Staff evaluates impairment and lease accounting without assuming abandonment.

What CPA Firms Should Measure

Connect these metrics to your Staff Accountant Competency Checklist, Accounting Employee Development Plan, Workpaper Review Checklist, and Accountants Shifting From Preparers to Reviewers.

Common Asset Impairment Training Mistakes

Mistake 1: Jump directly to fair value

Staff skip the held-and-used undiscounted recoverability gate and treat ASC 360 like a one-step valuation test.

Mistake 2: Use the wrong asset group

Loss-making assets are hidden inside overly broad groups or split into units whose cash flows are not actually independent.

Mistake 3: Pick the longest-lived asset as the primary asset automatically

The analysis ignores which finite-lived asset actually drives the group’s cash-flow-generating capacity.

Mistake 4: Use a market-participant DCF for Step 1

ASC 820 fair-value logic is substituted for entity-specific undiscounted recoverability cash flows.

Mistake 5: Ignore testing sequence

Inventory, indefinite-lived intangibles, or other assets that should be tested first leave the ASC 360 carrying amount overstated.

Mistake 6: Treat a trigger as automatic impairment

A negative event prompts a write-down without demonstrating that the asset group failed recoverability.

Mistake 7: Allocate the write-down to every balance in the group

Working capital and assets under other models receive inappropriate ASC 360 impairment.

Mistake 8: Reverse a held-and-used impairment when business improves

The new cost basis is ignored.

Mistake 9: Call an asset held for sale before all criteria are met

Depreciation stops too early and the measurement model changes prematurely.

Mistake 10: Treat abandonment as immediate zero value

The asset is still providing service and should remain held and used until it ceases to be used.

How SkillAbility Builds Asset Impairment Capability

BASE — Trigger and recoverability execution

• ASC 360 scope
• triggering events
• asset-group identification
• primary asset
• undiscounted cash flows
• recoverability conclusion

MAPS — Measurement and cross-topic judgment

• Impairment testing sequence
• forecast challenge
• ASC 820 fair value
• loss allocation
• useful-life changes
• ROU asset integration
• held-for-sale criteria

SUMMIT — Reviewer and restructuring readiness

• Review asset-group architecture
• challenge disposal plans
• review specialist valuations
• coordinate ASC 350 / ASC 360 / ASC 842 / ASC 205
• review significant restructurings
• review impairment disclosures
• coach staff without rebuilding the impairment analysis

Frequently Asked Questions About Asset Impairment Training

What is ASC 360?

ASC 360 is the U.S. GAAP Topic that includes accounting for impairment and disposal of long-lived assets, including held-and-used assets and long-lived assets or disposal groups classified as held for sale.

When is a long-lived asset tested for impairment?

A held-and-used long-lived asset or asset group is tested for recoverability when events or changes in circumstances indicate that its carrying amount may not be recoverable.

What are common ASC 360 impairment triggers?

Examples include significant market-price decline, adverse changes in asset use or physical condition, adverse legal/business changes, major construction cost overruns, operating/cash-flow losses with continuing loss expectations, and expected early sale or disposal.

What is an ASC 360 asset group?

An asset group is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

What is the primary asset under ASC 360?

The primary asset is the principal depreciable tangible or amortizable intangible asset that is the most significant component driving the asset group’s cash-flow-generating capacity. Its remaining useful life determines the recoverability cash-flow period.

Does ASC 360 use discounted cash flows for the recoverability test?

No. The held-and-used recoverability test compares carrying amount with undiscounted cash flows expected from use and eventual disposition of the asset group.

When is fair value used in ASC 360 impairment?

Fair value is used to measure the impairment loss only after a held-and-used asset group fails the undiscounted recoverability test.

Can fair value be below carrying amount without an ASC 360 impairment?

Yes. If undiscounted cash flows equal or exceed the carrying amount of a held-and-used asset group, the group is recoverable and no ASC 360 impairment is recognized even if fair value is lower.

How is an ASC 360 impairment loss measured?

After recoverability fails, the impairment loss equals the amount by which the asset group’s carrying amount exceeds its fair value.

How is an ASC 360 impairment allocated?

The loss is generally allocated to long-lived assets within ASC 360’s scope based on relative carrying amounts, subject to individual fair-value floors when fair value is determinable without undue cost and effort.

Can an ASC 360 held-and-used impairment be reversed?

No. The adjusted carrying amount becomes the asset’s new cost basis, and reversal of a previously recognized impairment loss on held-and-used long-lived assets is prohibited.

What happens to depreciation after impairment?

Future depreciation or amortization is recalculated prospectively using the impaired asset’s new cost basis, remaining useful life, and applicable salvage value.

What is the difference between held and used and held for sale?

Held-and-used assets use trigger-based undiscounted recoverability testing followed by fair value only if Step 1 fails. Held-for-sale assets are measured at the lower of carrying amount or fair value less cost to sell once all classification criteria are met.

Does depreciation stop when management decides to sell an asset?

Not merely upon an informal decision. Depreciation/amortization stops when the long-lived asset qualifies for held-for-sale classification under ASC 360.

How long does a held-for-sale sale plan generally have to take?

One of the held-for-sale criteria generally requires that the sale be probable and expected to qualify as a completed sale within one year, subject to specified exceptions.

Can a held-for-sale write-down later be recovered?

Subsequent increases in fair value less cost to sell can result in recognition of a gain, subject to the applicable ceiling based on prior carrying amount. This differs from the no-reversal rule for held-and-used impairment.

How are abandoned assets accounted for?

Assets to be abandoned remain classified as held and used until they cease to be used. A planned early abandonment can trigger recoverability testing and require a shorter useful life and revised depreciation.

Is temporarily idle equipment considered abandoned?

No. Temporary idling does not by itself qualify as abandonment, although the underlying facts can still create an impairment indicator.

Are right-of-use assets subject to ASC 360 impairment?

Yes. Lessee ROU assets can be part of ASC 360 asset groups and may require impairment analysis when changes in use or other triggering events occur.

What order should nonfinancial assets be tested for impairment?

When multiple models are triggered, entities generally test assets outside ASC 350/360 first, then indefinite-lived intangibles, then ASC 360 long-lived assets, and goodwill last.

How do you know when a staff accountant is review-ready for ASC 360?

A review-ready staff accountant can identify triggers, build the appropriate asset group, identify the primary asset, perform the undiscounted recoverability test, coordinate fair value, allocate any impairment, establish new cost bases, and route sale or abandonment plans into the correct accounting model.

Current Research and Authority Resources

• Deloitte — Impairments and Disposals of Long-Lived Assets and Discontinued Operations Roadmap, November 2025
• Deloitte — On the Radar: Impairments and Disposals of Long-Lived Assets and Discontinued Operations
• KPMG — Impairment of Nonfinancial Assets Handbook, September 2025
• KPMG — Discontinued Operations & Held-for-Sale Disposal Groups Handbook, May 2026
• KPMG — Effects of Tariffs on Financial Reporting, 2026
• Google Search Central — Optimizing for Generative AI Features

ASC 360 can intersect with ASC 350 goodwill and intangible impairment, ASC 842 leases, ASC 820 fair value, ASC 205-20 discontinued operations, ASC 330 inventory, ASC 326 credit losses, ASC 805 business combinations, ASC 740 income taxes, ASC 250 changes in estimates, and other specialized guidance. Verify current authoritative literature and transaction-specific facts for live work.

The Bottom Line

Asset impairment training should not produce staff who know only how to book the write-down.

It should produce accountants who can explain why the write-down exists—or why it does not.

Identify the accounting model before measuring impairment.

Monitor triggers continuously.

Build the asset group at the lowest independent cash-flow level.

Identify the primary finite-lived asset.

Test other asset classes in the right order.

Use entity-specific undiscounted cash flows for held-and-used recoverability.

Do not jump to fair value when Step 1 passes.

Use ASC 820 fair value only after recoverability fails.

Allocate impairment correctly and establish new cost bases.

Do not reverse held-and-used impairment.

Apply fair value less cost to sell only after held-for-sale criteria are met.

Keep abandonment, temporary idling, leases, and discontinued operations in their correct accounting lanes.

That is IMPAIR READY.

Protect Knowledge. Develop People. Scale the Firm.

To staff who can explain the impairment before review has to rebuild it,

Vincent Howard, CPA
Managing Partner, Howard, Howard and Hodges
SkillAbility for Accounting Firms

© 2026 SkillAbility for Accounting Firms. This article provides general educational information and does not replace client-specific U.S. GAAP, audit, tax, valuation, legal, real-estate, SEC, transaction-advisory, or other professional advice.