Cash-generating unit
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows largely independent of the inflows from other assets or groups. It is relevant when an asset does not generate independent inflows for impairment testing. The auditor assesses the grouping and supporting forecasts under IAS 36.
Worked example
A retail chain determines whether individual stores generate sufficiently independent inflows; the auditor challenges the grouping used for impairment testing.
Common mistake
Do not assume every legal entity, product or physical asset automatically forms a separate cash-generating unit.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |