ASPE 3063 Explained: Impairment of Long-Lived Assets for Canadian Private Companies (2026)

Reviewed by Bader A. Chowdry, CPA, CA, LPA on September 9, 2026

Private Canadian companies reporting under ASPE occasionally run into a long-lived asset, equipment sitting idle after a plant closure, a building whose market value has fallen well below its book value, a vehicle fleet made redundant by a route change, where the accounting question isn’t “how much do we depreciate this year” but “has this asset’s value actually broken.” Section 3063 of Part II of the CPA Canada Handbook governs exactly that question, and it works differently from both routine depreciation and the equivalent IFRS standard in ways that surprise owner-managers the first time it comes up.

When does ASPE 3063 actually require an impairment test?

Unlike goodwill, which most private companies test whenever specific triggering events occur, long-lived tangible and intangible assets under ASPE 3063 are only tested when there is an indicator that the carrying amount might not be recoverable: a significant decrease in market value, a change in the asset’s use, physical damage, a worse-than-expected operating or cash-flow performance, or a current expectation the asset will be disposed of before the end of its previously estimated useful life. Absent one of those triggers, there is no requirement to test at all; ASPE deliberately avoids imposing an annual mechanical exercise on private companies for assets other than goodwill and certain intangibles, which is one of the practical reasons ASPE is lighter-weight than IFRS for owner-managed businesses.

How does the two-step recoverability test actually work?

Step 1, recoverability. You compare the asset’s (or asset group’s) carrying amount to the sum of the undiscounted future net cash flows expected from its use and eventual disposal. If the carrying amount is less than or equal to that undiscounted total, the asset is considered recoverable and no impairment is recognized, the analysis stops here, and this is where most impairment questions actually resolve. Step 2, measurement. Only if Step 1 fails (carrying amount exceeds the undiscounted cash flows) do you move to measuring the loss itself: the impairment loss is the amount by which the carrying amount exceeds the asset’s fair value. Fair value is typically established by quoted market prices, an appraisal, or a discounted-cash-flow estimate when no market price exists.

Why does asset grouping matter before you even start?

Section 3063 requires testing at the level of an asset group, the lowest level for which cash flows can be identified and are largely independent of the cash flows of other assets and liabilities, rather than testing every individual piece of equipment on its own. In practice this means a piece of machinery that looks impaired in isolation may not be, once it’s correctly grouped with the production line it depends on and that line’s combined cash flows are still sufficient; conversely, grouping incorrectly is one of the most common technical errors we see in ASPE 3063 analyses prepared without CPA involvement.

Case study: a Mississauga manufacturer’s idle equipment

A GTA-based manufacturing client had a CNC machining line go idle for fourteen months after losing its largest customer, with a carrying amount of roughly $340,000. Management’s initial instinct was to write the line down to scrap value. Working through the ASPE 3063 test properly, correctly grouping the machine with two adjacent workstations that still generated independent cash flow, and using a realistic estimate of undiscounted future net cash flows from a partial redeployment already underway, the recoverability test passed at Step 1. No impairment was required, and the file was documented to withstand a future audit or review-engagement inquiry on the point.

Why can’t an impairment loss be reversed under ASPE 3063?

This is the detail that trips up finance teams moving between ASPE and IFRS, or reading US/international commentary. Under IAS 36 (the IFRS equivalent), an impairment loss on most assets other than goodwill can be reversed in a later period if circumstances that caused the impairment have changed. ASPE 3063 does not allow this. Once an impairment loss is recognized and the asset’s carrying amount is written down, that lower amount becomes the new cost basis for subsequent depreciation, and no future increase in fair value can restore any part of the loss to the balance sheet, the write-down is permanent as an accounting matter, regardless of what actually happens to the asset’s value afterward.

What does an impairment write-down do to your corporate tax return?

An ASPE impairment loss is a book (accounting) adjustment, not a tax event on its own. As a general matter, capital cost allowance continues to be calculated on the asset’s undepreciated capital cost for tax purposes under the CCA class system in the Income Tax Regulations, independent of any impairment recognized in the financial statements, the tax recognition of a genuine economic loss on that asset typically follows only when the asset is actually disposed of (as a capital loss or, within a CCA class, a terminal loss). This creates a deferred-tax difference between book and tax carrying values that a reviewer or auditor will expect to see reconciled.

Frequently asked questions

Does ASPE require an annual impairment test for all long-lived assets?

No. Unlike goodwill, long-lived tangible and intangible assets are tested only when a specific triggering event or change in circumstances indicates the carrying amount may not be recoverable.

What’s the difference between Step 1 and Step 2 of the ASPE 3063 test?

Step 1 (recoverability) compares carrying amount to undiscounted future net cash flows; if carrying amount is higher, you move to Step 2 (measurement), where the loss is carrying amount minus fair value.

Can an impairment write-down be reversed later if the asset’s value recovers?

No. ASPE 3063 prohibits reversal of a previously recognized impairment loss, unlike IFRS’s IAS 36, which permits reversal for most non-goodwill assets.

Does an accounting impairment loss reduce my company’s taxable income right away?

Not directly. CCA continues to be calculated on the asset’s undepreciated capital cost for tax purposes; the tax loss is generally realized only on actual disposition, creating a book-tax timing difference.