Business valuation for impairment testing is a process used to assess the recoverable amount of an asset or a group of assets to determine if they have suffered a significant decline in value. Both ASC 360 and International Financial Reporting Standards (IFRS) provide guidance on business valuation for impairment testing, but there are some differences in the approaches.

Under GAAP

• Identifying the Asset: Determine the specific asset or group of assets to be assessed for impairment. This could include tangible assets, intangible assets, or goodwill.

• Recoverable Amount: Estimate the recoverable amount of the asset or asset group, which is the higher of its fair value less costs to sell or its value in use. Fair value is determined based on market prices or using appropriate valuation techniques. Value in use is the present value of expected future cash flows derived from the asset or asset group.

• Compare to Carrying Value: Compare the recoverable amount with the carrying value of the asset or asset group. If the carrying value exceeds the recoverable amount, an impairment loss is recognized.

• Impairment Loss: Calculate the impairment loss as the difference between the carrying value and the recoverable amount. This loss is recognized in the income statement and reduces the carrying value of the asset

Under IFRS

• Identifying the Cash-Generating Unit (CGU): Determine the CGU, which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

• Recoverable Amount: Estimate the recoverable amount of the CGU. The recoverable amount is the higher of the CGU's fair value less costs to sell and its value in use. Fair value is determined based on market prices or using appropriate valuation techniques. Value in use is the present value of expected future cash flows derived from the CGU.

• Compare to Carrying Value: Compare the recoverable amount with the carrying value of the CGU. If the carrying value exceeds the recoverable amount, an impairment loss is recognized.

• Impairment Loss: Calculate the impairment loss as the difference between the carrying value and the recoverable amount. This loss is allocated to the CGU's assets in a specific order: first to reduce the carrying value of any goodwill allocated to the CGU, then to other assets on a pro-rata basis.

• Determining Fair Value:
Both GAAP and IFRS require the use of fair value in impairment testing when assessing the recoverable amount of an asset or CGU. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. GAAP provides more specific guidance on fair value measurements, including a hierarchy of valuation techniques (Level 1, 2, and 3) based on the availability of observable inputs. Level 1 inputs are quoted prices in active markets, while Level 2 inputs are observable market data or inputs derived from similar assets. Level 3 inputs are unobservable inputs based on a company's own assumptions. IFRS also provides guidance on fair value measurements but does not explicitly define a hierarchy of inputs like GAAP. IFRS emphasizes the use of professional judgment and market-based information to determine fair value.

• Consideration of Discount Rates:
Both GAAP and IFRS require the use of discount rates to calculate the present value of future cash flows when determining the value in use of an asset or CGU. The discount rate reflects the time value of money and the risks associated with the asset or CGU. Under GAAP, the discount rate used in impairment testing should reflect the entity's own weighted average cost of capital (WACC) or a rate that appropriately reflects the risks specific to the asset being tested. Under IFRS, the discount rate used should reflect the current market assessments of the time value of money and the risks specific to the asset or CGU. The discount rate may be a pre-tax or post-tax rate depending on the circumstances

​

It's important to note that both GAAP and IFRS require management judgment and consideration of various factors, such as market conditions, economic indicators, and future cash flow projections, in valuing assets for impairment testing. Additionally, detailed disclosure requirements exist under both frameworks to provide transparency regarding impairment assessments and their impact on financial statements