ExpenseImpairment
Impairment and obsolescence of a capitalized model
The posting
A capitalized model or training run that is superseded before the end of its useful life must be tested for impairment and written down when its carrying amount exceeds its recoverable amount IAS 38-97. AI obsolescence is fast, so impairment triggers, a newer model, a strategy change, disuse, should be monitored actively rather than discovered at year-end.
What triggers impairment
- A materially better model makes the capitalized artifact uneconomic to keep running.
- The product or workflow the asset supports is discontinued.
- Usage falls away, signalling the expected benefits will not be realized.
How the write-down is measured
Reduce the carrying amount to the recoverable amount and recognize the difference as an impairment loss in the period. This interacts with the useful-life estimate: frequent impairments are a signal the life was set too long in the first place.
Instruments and mechanics that land here
Primary sources
- [S5] IFRS Foundation: IAS 38 Intangible Assets (IFRS)
- [S1] KPMG: Hot Topic: Accounting for internal-use software (ASC 350-40) (US GAAP)
Ledger current as of 2026-07-24. A position and a citation, not accounting advice. See how we cite.