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Hello tutor
I would like to know what is the secret behind taking higher off between ( VIU and Recov amount)
for calculating the impairment ( for subsidiary or an associate)
Is it a rule ? or there is something special about it ?
my second question is
why Associate is treated as an asset in the SOFP ?If ViU is greater – management would decide to keep the asset.
If the recoverable amount is greater – management would decide to sell it.Taking the higher amount reflects the economic benefits “embodied” in the value which is consistent with how those benefits are expected to be received – through keeping and using – or through selling.
An associate is an investment – this is assumed knowledge of FA (F3).
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