As impairment calculations are fairly complex, especially in case of continuing businesses, no such
calculations should be prepared and no impairment losses should be recognized unless Group
Corporate Accounting Department has given their approval.
5. Impairment Testing
• Impairment test compares an asset’s (or CGU’s) carrying amount (section 5.1) with its recoverable
amount (section 5.2).
• Impairment is recognized when an asset’s (CGU’s) recoverable amount is lower than the asset’s
(CGU’s) carrying amount.
• No adjustment is required when the recoverable amount is higher than the asset’s (CGU’s) carrying
amount, unless there has been an impairment loss recognized in previous periods and the
recoverable amount has increased in comparison with its recoverable amount at the end of the
previous reporting period (section 7).
5.1. Carrying amount
• As an item assessed for impairment must generate cash flows that are largely independent from
other assets, in most cases, individual assets (including goodwill) need to be grouped into cash
generating units (CGUs) (section 2.2).
• The carrying amount of a CGU must be determined on a basis consistent with the determination of
the recoverable amount.
• The carrying amount of a CGU should include the followings:
Note: The above diagram provides framework for subsidiaries in determining the carrying amount of
a CGU. Methodology, where allowable, may vary from CGU to CGU; however, reasonable and
consistent basis between the carrying amount and cash flows used in calculation of VIU and
between periods should be ensured by subsidiaries. Subsidiaries should provide justification to
Group Accounting Department in the event of change in methodology from the framework provided
above.
5.1.1. Directly attributable assets
- Assets are allocated to a CGU if either:
As impairment calculations are fairly complex, especially in case of continuing businesses, no such
calculations should be prepared and no impairment losses should be recognized unless Group
Corporate Accounting Department has given their approval.
5. Impairment Testing
• Impairment test compares an asset’s (or CGU’s) carrying amount (section 5.1) with its recoverable
amount (section 5.2).
• Impairment is recognized when an asset’s (CGU’s) recoverable amount is lower than the asset’s
(CGU’s) carrying amount.
• No adjustment is required when the recoverable amount is higher than the asset’s (CGU’s) carrying
amount, unless there has been an impairment loss recognized in previous periods and the
recoverable amount has increased in comparison with its recoverable amount at the end of the
previous reporting period (section 7).
5.1. Carrying amount
• As an item assessed for impairment must generate cash flows that are largely independent from
other assets, in most cases, individual assets (including goodwill) need to be grouped into cash
generating units (CGUs) (section 2.2).
• The carrying amount of a CGU must be determined on a basis consistent with the determination of
the recoverable amount.
• The carrying amount of a CGU should include the followings:
Note: The above diagram provides framework for subsidiaries in determining the carrying amount of
a CGU. Methodology, where allowable, may vary from CGU to CGU; however, reasonable and
consistent basis between the carrying amount and cash flows used in calculation of VIU and
between periods should be ensured by subsidiaries. Subsidiaries should provide justification to
Group Accounting Department in the event of change in methodology from the framework provided
above.
5.1.1. Directly attributable assets
- Assets are allocated to a CGU if either:
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