according to pas 36, if it is not possible to determine the recoverable amount of an individual asset,
According to PAS 36, if it is not possible to determine the recoverable amount of an individual asset, what should be done?
Answer:
In accordance with Publicly Accepted Standard (PAS) 36, if it is not possible to determine the recoverable amount of an individual asset, the recoverable amount of the asset’s cash-generating unit (CGU) should be assessed. The CGU is the smallest group of assets that generates cash inflows largely independent of the cash inflows of other assets or groups of assets.
If the recoverable amount of the CGU is higher than the carrying amount of the CGU, then the individual asset is not impaired. However, if the recoverable amount of the CGU is less than the carrying amount, then the impairment loss should be allocated to reduce the carrying amount of the individual asset. The impairment loss allocated to the individual asset should not exceed the carrying amount of that asset. This approach ensures that the impairment loss is allocated first to the carrying amount of the individual asset before reducing the carrying amounts of other assets within the CGU.