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An entity's market capitalisation has dropped below the carrying amount of its net assets. Under Ind AS 36:
AImmediate impairment must be recognised at the gap
BThis is an EXTERNAL indicator of impairment; the entity must assess assets/CGUs for impairment (estimate recoverable amount where appropriate)
CNo action required — market cap fluctuations are independent of carrying amounts
DOnly relevant for listed companies
Answer & Solution
Correct answer: B. This is an EXTERNAL indicator of impairment; the entity must assess assets/CGUs for impairment (estimate recoverable amount where appropriate)
Paragraph 12(d) lists net assets > market cap as an external indicator. The required response is to estimate recoverable amount — not auto-impair to the market-cap gap. Market evidence triggers, but does not measure, the impairment.
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