RJ 121 impairment: the impairment test in Dutch annual accounts

The short answer

RJ 121 elaborates art. 2:387(3) and (4) of the Dutch Civil Code (DCC). At each balance sheet date you check whether a fixed asset may be worth less. If so, you determine the recoverable amount: the higher of net selling price and value in use. If it is below the carrying amount, you write the asset down. If the value recovers, you reverse the write-down, except for goodwill.

Updated 30 October 2026

Key facts

What the law requires

3. When valuing fixed assets, account is taken of a reduction in their value if this is expected to be permanent. When valuing financial fixed assets, account may in any case be taken of a reduction in value that has occurred at the balance sheet date.

4. The write-down in accordance with the preceding paragraphs is, insofar as it is not deducted from the revaluation reserve under article 390(3), charged to the profit and loss account. The write-down is reversed as soon as the reduction in value has ceased to exist. The write-downs under paragraph 3, as well as the reversals, are shown separately in the profit and loss account or in the notes.

5. The second sentence of paragraph 4 does not apply to write-downs of goodwill.

RJ 121 makes this concrete for intangible, tangible and financial fixed assets, whether they are carried at cost, current value or net asset value. Because the value in use includes the cash flows over the entire remaining useful life, a write-down based on RJ 121 meets the requirement that the loss be permanent (RJ 121.104).

Step 1: are there indications?

You do not have to run a full test every year. You do check at each balance sheet date whether there are signals (RJ 121.202 and 121.203; RJk A2.303 and A2.304). Think of:

• a market value that falls much faster than wear and tear and time would lead you to expect;
• adverse developments in technology, markets, the economy or regulation;
• a higher market interest rate that noticeably affects the discount rate and therefore the value;
• physical damage, obsolescence, or plans to stop the activity or dispose of it early;
• internal figures that are clearly worse than budgeted, such as higher maintenance costs or losses;
• in the RJ only: a market capitalisation of the share capital below equity.

If a higher interest rate does not materially affect the calculation, for example because only the short-term rate rose, you do not need to recalculate (RJ 121.204). Even without a write-down, a signal can be a reason to revise the useful life, depreciation method or residual value; that is a change in estimate.

Step 2: the recoverable amount

The recoverable amount is the higher of two amounts. If either one is already higher than the carrying amount, there is no write-down and you do not need to calculate the other.

If the asset is to be sold soon and there is no reason to think the value in use is materially higher, you may settle for the net selling price (RJ 121.303; RJk A2.305).

Step 3: the cash-generating unit and goodwill

Many assets do not earn their income independently of others. You then test the smallest group of assets with their own, largely independent cash flows: the cash-generating unit (RJ 121.501 to 121.512). Goodwill never generates cash flows on its own, so you always test it through the units that benefit from the acquisition. Common assets, such as a head office, you allocate where that can reasonably be done (RJ 121.517 to 121.519).

A loss on a unit first reduces the goodwill and then the other assets in proportion to their carrying amounts. No asset is thereby reduced below the highest of its own net selling price, value in use or zero; whatever is left over passes on to the other assets (RJ 121.520 and 121.521).

Recognition, reversal and insurance payouts

• The loss is charged directly to the result. If the asset is carried at current value with a revaluation reserve, it is first deducted from that reserve (art. 2:390(3) DCC; RJ 121.402).
• You then depreciate the reduced carrying amount over the remaining useful life (RJ 121.404).
• You reverse only if the underlying estimate has changed, not because the cash flows are getting closer. The carrying amount never becomes higher than it would have been after depreciation without the write-down. You never reverse goodwill (RJ 121.605 to 121.613; art. 2:387(5) DCC).
• An insurance payout for a damaged asset is a separate event: you book the loss now and the payout once it is probable (RJ 121.702; RJk A2.322).

Case: the Northern region of Liftverhuur Holland BV

Liftverhuur Holland BV (fictitious, medium-sized) rents out construction hoists. On 31 December 2026 the Northern region loses its largest customer and results stay far below budget. The Northern region is a cash-generating unit with these carrying amounts: goodwill from an acquisition € 150.000, hoists € 900.000 and a depot € 450.000, together € 1.500.000.

An estate agent estimates that the whole region would fetch € 1.020.000, with € 40.000 in selling costs: net selling price € 980.000. The recoverable amount is the higher, rounded € 1.090.000. The loss is € 1.500.000 − € 1.090.000 = € 410.000.

According to a valuation, the depot has its own net selling price of € 420.000 and may not go below that. Of its share of € 86.667, only € 30.000 therefore remains; the remaining € 56.667 passes to the hoists. The hoists are depreciated over five years from 2027: € 134.000 a year instead of € 180.000. If the market demonstrably improves in 2028, the write-down on hoists and depot may be reversed up to the amount that would have been on the balance sheet after depreciation without the write-down; the goodwill stays at € 0.

What each class explains in the notes

How it works in Jaarrekening.io

If you keep your bookkeeping in Jaarrekening.io, you book an impairment or reversal per asset, with mandatory supporting evidence such as a valuation. The notes questionnaire then asks whether impairments were written off or reversed, with the amount per group of fixed assets and the line item under which it appears. The test itself, with cash flow forecast and discount rate, remains a judgement of the board; the app does not calculate the value in use for you.

Sources

• Art. 2:387 DCC: impairment and reversal (wetten.overheid.nl, in Dutch)
• Art. 2:390 DCC: revaluation reserve (wetten.overheid.nl, in Dutch)
• Decree on current value: value in use and net selling price (wetten.overheid.nl, in Dutch)
• Financial Reporting Council (Raad voor de Jaarverslaggeving): Guidelines (rjnet.nl)

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