The second wave of Covid-19 is likely to trigger another round of fair value testing of assets for several companies and conglomerates.In March last year, some of the largest companies and conglomerates had to test their assets — plant, machinery and even investment in subsidiaries — to predict the precise impact of the pandemic.In several cases, companies had predicted that they would ride the Covid wave within a year and there may not be a severe impact.Some large companies and conglomerates had even taken large impairments last year.“In view of the continuing Covid situation, companies may need to re-evaluate impairment indicators on assets and cashflow projections. In some sectors cashflows may be better than projections made previously. The challenge is to make estimates of future cashflows considering volatility and uncertainties,” said Sudhir Soni, Partner at SR Batliboi, an audit firm.“Unlike last year, there is greater clarity about the possible impact on various parameters for assessing impairment. Hence, the risk and implication on the financial statements may be lower and more measurable as compared to last year. The impact is also likely to be more sectoral than general as both clients and auditors have a better understanding of Covid-19,” said Nikhil Singhi, a senior partner at Singhi & Co.Asset impairment happens when the market value of that asset is lower than value listed on the holding company’s balance sheet.Conglomerates and companies will now have to reassess and, in some cases, even write down the value of assets and subsidiaries on their balance sheet. Some companies could even get an independent expert to say that the subsidiary still has value equal to that listed on the balance sheet.Manufacturing companies’ assets may be revised in their financials in the current quarter. Some of the companies that acquired or merged will also have to test the real value of these for the financials.Many companies and conglomerates last year were treating the fall in the price of some of their assets as temporary and hoped that they would recover within the next few months so they don’t have to account for asset impairment, but auditors are saying that as the impairment trigger has been raised after fall in share value below investment price, they will have to provide for it.In most cases the assumptions were made for the next one year, since April 2020. This would mean that in the current quarter companies’ assets will have to be revalued again. Some companies and their auditors may again find themselves in the opposite corner on the issue, warn industry trackers.ET had first written about the issue in March 2020. While large companies and conglomerates had taken the impairment, some of the mid-level companies resisted.Sectors including hospitality, aviation, tours and travel and infrastructure had seen the largest impairment last year.