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Hello tutor hope you are doing well
I wanted to know something
can you pls tell me why not to use tax adjusted figure for calculating the value in use figure?and what are the guidelines given by IAS for 36 for CGU’s ?
All well thanks, hope the studying is going well.
We don’t know the tax rates in the future to be certain in our calculations, so use pre tax cash flows and a pre tax discount rate.
A CGU is the smallest group of assets that generate revenues independently. So if you are a chain of theme parks, then the individual them park is a CGU. We couldn’t look at the individual assets (roller coasters) as we couldn’t work out the cash flows for each. Also a restaurant group, we’d look at the individual restaurants as we couldn’t work out the cash flows for the ovens etc.
Thanks
thanks tutor..
thanks for making it easier for me.I would also like to know for impairment ias36 and ifrs 5 can you please tell me in short what are the steps needed to follow if an asset needs to classify as ifrs5 held for sale
and how do we take account of reversal of impairment in our workings ?
Hi,
Glad we’re able to help you out.
There are no steps as such, we just need to see if the asset meets the criteria to held for sale under IFRS 5 and if it does then the asset is held at the lower of the carrying value and fair value less costs to sell.
For the impairment you need to calculate the current carrying value and then compare it to the new, increased value of an asset. It’s easier to approach this one with an actual question that involves the computation.
Thanks
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