Accounting Standards 1-29 - Seth & Associates

determined unless management has decided to dispose of the asset.
As a consequence, if there is an indication that a corporate asset may
be impaired, recoverable amount is determined for the cash-generating
unit to which the corporate asset belongs, compared to the carrying
amount of this cash-generating unit and any impairment loss is
recognised in accordance with paragraph 87.
85. In testing a cash-generating unit for impairment, an enterprise
should identify all the corporate assets that relate to the cashgenerating
unit under review. For each identified corporate asset,
an enterprise should then apply paragraph 78, that is:
a. if the carrying amount of the corporate asset can be
allocated on a reasonable and consistent basis to the
cash-generating unit under review, an enterprise should
apply the ‘bottom-up’ test only; and
b. if the carrying amount of the corporate asset cannot be
allocated on a reasonable and consistent basis to the
cash-generating unit under review, an enterprise should
apply both the ‘bottom-up’ and ‘top-down’ tests.
86. An example of how to deal with corporate assets is given as Example 8
in the Appendix.
Impairment Loss for a Cash-Generating Unit
87. An impairment loss should be recognised
for a cash-generating unit if, and only if, its
recoverable amount is less than its carrying
amount. The impairment loss should be
allocated to reduce the carrying amount of
the assets of the unit in the following order:
a. first, to goodwill allocated to the
cash-generating unit (if any); and
b. then, to the other assets of the unit
on a pro-rata basis based on the
carrying amount of each asset in
the unit.
These reductions in carrying amounts
should be treated as impairment losses on
individual assets and recognised in
accordance with paragraph 58.