Recoverable amount
Recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use, as determined under IAS 36. An impairment loss arises when the carrying amount exceeds recoverable amount, subject to the standard’s requirements.
Worked example
A cash-generating unit has fair value less disposal costs of 90, value in use of 110 and carrying amount of 125. Recoverable amount is 110 and the impairment is 15.
Common mistake
Do not choose the lower of the two amounts or substitute ordinary selling costs for the required disposal-cost measure.
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 |