Impairment loss for a
cash-generating unit
104. An
impairment loss shall be recognised for a cash-generating
unit (the smallest group of cash-generating units to which
goodwill or a corporate asset has been allocated) if, and
only if, the recoverable amount of the unit (group of units)
is less than the carrying amount of the unit (group of
units). The impairment loss shall be allocated to reduce the
carrying amount of the assets of the unit (group of units)
in the following order:
(a)
first, to reduce the carrying amount of any goodwill
allocated to the cash-generating unit (group of units);
and
(b)
then, to the other assets of the unit (group of units)
pro rata on the basis of the carrying amount of each
asset in the unit (group of units).
These
reductions in carrying amounts shall be treated as
impairment losses on individual assets and recognised in
accordance with paragraph 60.
105. In
allocating an impairment loss in accordance with paragraph
104, an entity shall not reduce the carrying amount of an
asset below the highest of:
(a) its
fair value less costs to sell (if determinable);
(b) its
value in use (if determinable); and
(c)
zero.
The amount
of the impairment loss that would otherwise have been
allocated to the asset shall be allocated pro rata to the
other assets of the unit (group of units).
106. If it is not
practicable to estimate the recoverable amount of each
individual asset of a cash-generating unit, this Standard
requires an arbitrary allocation of an impairment loss
between the assets of that unit, other than goodwill,
because all assets of a cash-generating unit work together.
107. If the
recoverable amount of an individual asset cannot be
determined (see paragraph 67):
(a) an
impairment loss is recognised for the asset if its
carrying amount is greater than the higher of its fair
value less costs to sell and the results of the
allocation procedures described in paragraphs 104 and
105; and
(b) no
impairment loss is recognised for the asset if the
related cash-generating unit is not impaired. This
applies even if the asset’s fair value less costs to
sell is less than its carrying amount.
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