Trucks standing idle: when to write them down

When a transporter that lost a contract should write down trucks left standing, how the amount is measured, and what happens if the work returns.

By Achekam · 11 October 2026 · 5 min read · For Logistics businesses in South Africa, Nigeria, Kenya

The contract with the mine ended at the end of the quarter, and it was not renewed. The side-tippers bought for that work are now parked in a row in the yard. They are still in good condition, still insured and still depreciating every month in the books, but they are not earning anything, and nobody knows yet whether another contract will come.

The accounts still show those trucks at what they cost less depreciation, as though they were working. The owner's accountant asks the obvious question at year end: are they really worth that much to the business now? That is the question impairment answers.

The rule: no asset above what it can recover

The core principle of IAS 36 is that an asset must not be carried in the financial statements at more than the highest amount that can be recovered through its use or its sale. If the carrying amount is higher than that recoverable amount, the asset is impaired: the business reduces the carrying amount to the recoverable amount and recognises the difference as an impairment loss. The IFRS Foundation summarises the standard on its IAS 36 page.

Depreciation spreads an asset's cost over its useful life on the assumption that it keeps being used. Impairment deals with the case where something has changed and that assumption no longer holds.

What a truck can recover

Under IAS 36, recoverable amount is the higher of two figures:

• Fair value less costs to sell: what the truck would fetch if sold today, less the costs of selling it, such as auctioneer's or dealer's fees.
• Value in use: the expected future cash flows the truck will produce in its current condition, discounted to their present value.

Because it is the higher of the two, a truck is only impaired if both its sale value and its value in use fall below its carrying amount. A truck with no work in prospect may have little value in use, but if the second-hand market for that model is strong, its sale value may still cover the carrying amount, and no write-down is needed.

Signs that the trucks may be impaired

Nobody needs to test every truck every month. The work starts when something suggests that the fleet's value may have dropped. For a transporter, typical triggers are:

1. A lost contract, especially one the trucks were bought for.
2. Trucks standing idle for a long period, with no firm work to replace the contract.
3. Falling resale prices for the models you run, for instance when changes in the market lower what buyers will pay.
4. Damage or wear beyond what the depreciation assumed.

When any of these applies, gather the evidence and work out the recoverable amount for the affected trucks.

Market value is not book value

Investopedia notes that an asset's carrying value often differs significantly from its market value. For trucks, the two can drift apart in either direction. A carefully maintained truck depreciated quickly may be worth more than its book value; a specialised body built for one customer may be worth far less.

That is why the test uses actual evidence of value: dealer valuations, recent auction results for similar units, or written offers. Keep those documents.

The same review is the moment to look at useful lives. ACCA explains that IAS 16 requires useful life and residual value estimates to be reviewed at the end of each reporting period, with significant changes accounted for over the remaining useful life. If the trucks will probably be sold sooner than planned, or their residual value is lower, the depreciation going forward needs to change as well.

Recording a write-down, and reversing it if the work returns

A worked example in words. The accountant compares each idle truck's carrying amount with the higher of its dealer valuation less selling costs and its value in use, which is low because no work is in sight. For several trucks the carrying amount is higher. The difference for each one is the impairment loss for the year.

In Achekam, the write-down is posted as a manual journal: the impairment loss to an expense account, and the reduction against the trucks' carrying amount, using the accounts your accountant chooses. Achekam refuses a journal that does not balance or is dated in a closed month, and a posted journal is corrected only by reversing it, so the write-down and any later change stay visible on the record.

Achekam's fixed-asset register adds assets at cost, depreciates them monthly by straight line or reducing balance with a journal each month, and disposes of them with the profit or loss posted. Talk to your accountant about how the register's monthly depreciation should be treated after the write-down, since the register posts its charge from the cost and method you entered for each truck.

Then suppose a new contract arrives the following year and the trucks go back to work. IAS 36 states that when the circumstances that caused an impairment loss are favourably resolved, the loss is reversed, except for goodwill, which is never reversed. The reversal cannot lift the carrying amount above what it would have been if no impairment had been recognised. Your accountant works out that ceiling, and the reversal is posted as another journal.

The management accounts show the effect: an income statement for a chosen period beside the period before, and a balance sheet at period end, both built from the business's own journals and exportable as PDF or CSV. The write-down appears as an expense in the year it is made, and the reversal, if it comes, as income in the year the work returns.

What to keep on file for the accountant

Prepare a short pack for each affected group of trucks:

Look at the fleet before year end

If trucks are standing, do not wait for the auditor to ask. Gather valuations, set out the realistic prospects for work, and agree with your accountant whether a write-down is needed. For depreciation in normal times, see depreciating a fleet, and for a truck destroyed rather than idle, a truck written off.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.