The recoverable amount is the greater of the asset's value in use (present value of future values) or net realizable value. If the company intends to sell the asset, the recoverable amount is equal to its fair value less the cost of disposal. 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? If there is a strong indication that the recoverable amount will drop significantly, the asset impairment test must be performed. 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. 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 - … [IAS 36.66] If it is not possible to determine the recoverable amount (i.e. lease liabilities. Recoverable amount should be determined for the individual asset, if possible. Under IAS 36, the recoverable amount is the higher of the asset’s fair value less cost to sell and its value in use. ASC 360 provides general guidelines as to when an asset (asset group) should be tested for impairment. cash flow. The latter is the present net worth of the asset or cash-generating unit (CGU). There is an impairment loss of: How often should goodwill acquired in a business combination be tested for impairment? If an entity uses a ‘free . 3 ’ valuation approach 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. The CA will generally include the ROU asset value and the lease liability. 2 (refer to the section on . below for more details). 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. Example Successive revaluations. Amount (CA) and the Recoverable Amount (RA) of a CGU in an IAS 36 impairment calculation. 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. 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