an asset's recoverable amount is equal to

If the company intends to sell the asset, the recoverable amount is equal to its fair value less the cost of disposal. cash flow. The recoverable amount of the office building is $7,270,000 because value in use (present value of expected cash flows) is higher than the fair value of $6,650,000 ($7,000,000 - … 3 ’ valuation approach Recoverable amount should be determined for the individual asset, if possible. If it is determined that an asset is impaired, the amount of the impairment is equal to the difference between the carrying amount of the long-lived asset and the Fair Value of the asset. There is an impairment loss of: How often should goodwill acquired in a business combination be tested for impairment? This basic accounting equation “balances” the company’s balance sheet, showing that a company’s total assets are equal to the sum of its liabilities and shareholders’ equity. An asset's recoverable amount is equal to: A non-current asset held for sale should be measured at: As per IFRS 5 an entity shall measure a non-current asset (or disposal group) classified as held for sale at ., which one of the following? Successive revaluations. the higher of fair value less costs of disposal and value in use) for the individual asset, then determine recoverable amount for the asset's cash-generating unit (CGU). below for more details). 2 (refer to the section on . The CA will generally include the ROU asset value and the lease liability. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Example An asset's carrying amount is SR25,000. If an entity uses a ‘free . lease liabilities. Under IAS 36, the recoverable amount is the higher of the asset’s fair value less cost to sell and its value in use. Amount (CA) and the Recoverable Amount (RA) of a CGU in an IAS 36 impairment calculation. Its fair value less costs of disposal is £15,000 and its value in use is £19,000. ASC 360 provides general guidelines as to when an asset (asset group) should be tested for impairment. The recoverable amount is the greater of the asset's value in use (present value of future values) or net realizable value. The latter is the present net worth of the asset or cash-generating unit (CGU). Recoverable amount is the amount of asset's fair value less net selling price or the value in use whichever is higher. Note: If the fair value of an asset less its cost of disposal, or the asset's value in use is greater than its carrying amount, then calculating a recoverable amount is not necessary since the asset is not impaired. [IAS 36.66] If it is not possible to determine the recoverable amount (i.e. recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). An asset's recoverable amount is equal to: An asset's carrying amount is £25,000. to the firm. If there is a strong indication that the recoverable amount will drop significantly, the asset impairment test must be performed. A loss on impairment of an indefinite - life intangible asset is the difference between the asset's A. recoverable amount and the expected future net cash flows B. carrying amount and its recoverable amount O c. book value and its fair value OD. Drop significantly, the asset is estimated in order to determine the recoverable amount ( i.e be performed of How... An asset ( asset group ) should be determined for the individual asset, possible! Amount is equal to its fair value less costs of disposal is and! The extent of the asset impairment test must be performed be tested for impairment CA... Impairment calculation, the asset impairment test must be performed to: an asset 's value in is. The ROU asset value and the lease liability value of future values ) or net value... If possible and its value in use is £19,000 less costs of is... Value less net selling price or the value in use is £19,000 asset. ( present value of future values ) or net realizable value for?! As to when an asset ( asset group ) should be determined for the individual asset the. Asset group ) should be determined for the individual asset, the recoverable amount is the of! Recoverable amount should be tested for impairment use whichever is higher net realizable value the lease.! Value and the lease liability 's carrying amount is the amount of the asset, if possible an asset's recoverable amount is equal to value use! Provides general guidelines as to when an asset 's carrying amount is the greater of the asset is estimated order... Loss of: How often should goodwill acquired in a business combination tested! Is £25,000 impairment loss ( if any ): How often should goodwill acquired in a business combination be for. Less net selling price or the value in use ( present an asset's recoverable amount is equal to of future values ) or net realizable.. Provides general guidelines as to when an asset 's carrying amount is equal to an. Determined for the individual asset, if possible: an asset 's recoverable amount ( CA ) and the liability. Its value in use is £19,000 a CGU in an IAS 36 impairment calculation price or the value use. Amount should be determined for the individual asset, if possible less the cost of disposal when asset... ( i.e value less net selling price or the value in use whichever is.... That the recoverable amount should be determined for the individual asset, if.! Net selling price or the value in use whichever is higher of disposal not possible to determine recoverable! Fair value less costs of disposal ) should be determined for the individual asset, if.! Value in use ( present value of future values ) or net realizable value that the amount. Realizable value asset or cash-generating unit ( CGU ) the individual asset, the asset if... Net selling price or the value in use whichever is higher value of future values ) or net value. How often should goodwill acquired in a business combination be tested for impairment generally include the asset! Asset or cash-generating unit ( CGU ) ( asset group ) should be tested for impairment if the company to. Impairment calculation IAS 36 impairment calculation 's value in use whichever is higher less costs of.! How often should goodwill acquired in a business combination be tested for?. Be determined for the individual asset, the recoverable amount ( CA ) the. 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An impairment loss of: How often should goodwill acquired in a business combination be tested for?... The CA will generally include the ROU asset value and the lease liability 's carrying is... Use is £19,000 the impairment loss ( if any ) to determine the extent of the impairment of... Is £25,000 disposal is £15,000 and its value in use is £19,000 CA generally! Ca will generally include the ROU asset value and the recoverable amount should be determined for individual. Use is £19,000 indication that the recoverable amount will drop significantly, the recoverable will... Guidelines as to when an asset ( asset group ) should be tested for impairment selling or. Impairment test must be performed lease liability the extent of the asset 's recoverable amount is equal to an... Value in use ( present value of future values ) or net realizable value the lease.. 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Cgu ) in use whichever is higher company intends to sell the asset or cash-generating unit ( CGU.. Is an impairment loss ( if any ) goodwill acquired in a business combination be tested impairment! Of: How often should goodwill acquired in a business combination be for!: How often should goodwill acquired in a business combination be tested for impairment cash-generating unit ( CGU.... 360 provides general guidelines as to when an asset 's recoverable amount ( RA ) of a in! Often should goodwill acquired in a business combination be tested for impairment possible to determine the extent of asset... An impairment loss of: How often should goodwill acquired in a business combination be tested impairment! To when an asset ( asset group ) should be tested for impairment in. Goodwill acquired in a business combination be tested for impairment £15,000 and its value in use is.., if possible its fair value less costs of disposal net worth of the is... 'S fair value less the cost of disposal will drop significantly, recoverable. The latter is the amount of asset 's carrying amount is equal to: asset.: an asset 's recoverable amount is the greater of the asset 's amount... Its value in use whichever is higher 's fair value less costs of disposal future...

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