AAFR IAS-36 BY MAH CFAP-1

CASH GENERATING [CGU]

Cash Generated Unit (CGU)

AH
Smallest identifiabe group of assets that generate cash flows which are largely independent of other assets and group of assets

Recoverable amount of CGU

It is determined using same principles as used for an individual asset
For practical reasons, if recoverable amount of CGU can only be determined after considering certain current assets (e.g. inventory)
then carrying amount of CGU should also include carrying amount of those asssets for the purpose of calculation of impairment loss

Impairment Loss of CGU

If CGU and any individual asset are tested for impairment at the same time then individual asset is tested for impairment before CGU

Impairment Loss of CGU is allocated to asset as follows

A Specificaaly impaired ASSET
B Loss is first allocated to goodwill
C Remaining Loss is allocated to other assets [within the scope of IAS-36] on Pro -Rata basis ( NBV Proportional basis) .

While allocating impairment Loss ON PRO RATA BASIS THE revised CV of any Asset shall not LOWER the highest of FOLLOWING :
(i) VIU
(ii) FV Less Cost to Sell
(iii) Zero

Any Unallocated Impaiment Loss is allocated on Pro Rata basis to remaining assets
Ex-1
CV of CGU
Land 12,500
Building 25,000
P&M 37,500
Equipments 20,000
Furniture 10,000
Goodwill 1,250

106,250
Assets are carried at Cost model
Recoverable amount of CGU is Rs. 92,500

Ex-2
CV of CGU
Land 17,500
Building 35,000
P&M 52,500
M
Equipments 28,000
Furniture 14,000
Goodwill 1,750

148,750
Assets are carried at Cost model
R.A of CGU is Rs. 129,500 129,500
Fair Value Less Cost to sell of Land of is Rs . 16,450

Ex-2.1
CV of CGU
Land 17,500
Building 35,000
P&M 52,500
Equipments 28,000
Furniture 14,000
Goodwill 1,750

148,750
Assets are carried at Cost model
R.A of CGU is Rs. 129,500 129,500
Fair Value Less Cost to sell of Land of is Rs . 15,225

Mirza Ali Hassan 1 MAH NOTES

 AAFR IAS-36 BY MAH CFAP-1

Ex-2.2
CV of CGU

AH
Land 17,500
Building 35,000
P&M 52,500
Equipments 28,000
Furniture 14,000
Goodwill 1,750

148,750
Assets are carried at Cost model
R.A of CGU is Rs. 129,500 129,500
Fair Value Less Cost to sell of Land of is Rs . 19,075

Ex-3
CV of CGU
Land & Building 54,000
P&M 67,500
Software 3,150
Equipments 45,000
Goodwill 2,250

171,900
Assets are carried at Cost model
Recoverable amount of CGU is Rs. 153000
Fair Value Less Cost to sell of Land & building is Rs . 63000
It is decided to sell the existing software and for which
price is agreed at Rs.1800 & agreement made

Ex-4
CV of CGU
Land & Building 52,000
P&M 58,500
Software 6,500
Equipments 26,000
Goodwill 2,600
Inventory 1,950
147,550

Assets are carried at Cost model

Recoverable Amount of CGU is Rs. 130,000
An Item of P&M having CV of Rs.7800 is damaged and
expected to be sold for Rs.2600
M
Ex-5
NBV
Land & Building 28,000.0
P&M 31,500.0
Investment Property-Cost model 17,500.0
Investment Property-FV model 24,500.0
Software 5,250.0
Equipments 18,900.0
Goodwill 1,750.0
Inventory 2,100.0
129,500.0

Assets are carried at Cost model

Recoverable Amount of CGU is Rs. 105,000
An Item of P&M having CV of Rs.6300 is damaged and expected to be sold for Rs.3000
FV-Less Cost to sell of Land & Building is Rs.25200
FV-Less Cost to sell of Investment property-cost model is Rs.12250

Required : Deterimine Revised NBV of all Assets after allocation of imoairment loss if any

Ex-6
NBV
Land & Building 40,000
P&M 45,000
Investment Property-Cost model 25,000
Investment Property-FV model 35,000
Software 7,500
Equipments 27,500
Goodwill 2,750
Inventory 3,750
186,500

Assets are carried at Cost model

FV LESS COST TO SELL OF CGU IS 150,000 AND VIU IS RS 152,500
An Item of P&M having CV of Rs.8750 is damaged and expected to be sold for Rs.3800
FV-Less Cost to sell of Land & Building is Rs.37500
FV-Less Cost to sell of Investment property-cost model is Rs.22000

Required :
Deterimine Revised NBV of all Assets after allocation of imoairment loss if any

Mirza Ali Hassan 2 MAH NOTES