Accounting Standards 1-29 - Seth & Associates

Year Long-term
growth rates
20X5
(n=1)
Future
cash flows
Present value factor
at 15% discount
rate(3)
230(1) 0.86957 200
20X6 253(1) 0.75614 191
20X7 273(1) 0.65752 180
20X8 290(1) 0.57175 166
20X9 304(1) 0.49718 151
20X10 3% 313(2) 0.43233 135
20X11 -2% 307(2) 0.37594 115
20X12 -6% 289(2) 0.32690 94
20X13 -15% 245(2) 0.28426 70
20X14 -25% 184(2) 0.24719 45
20X15 -67% 61(2) 0.21494 13
Value in
use
(1) Based on management’s best estimate of net cash flow projections (after the 40% cut).
(2) Based on an extrapolation from preceding year cash flow using declining growth rates.
Discounted future
cash flows
1,360
(3) The present value factor is calculated as k = 1/(1+a)n, where a = discount rate and n = period of discount.
Schedule 3. Calculation and allocation of the impairment loss for the Country A
cash-generating unit at the end of 20X4 (Amount in Rs. lakhs)
End of 20X4 Goodwill Identifiable
assets
Total
Historical cost 1,000 2,000 3,000
Accumulated depreciation/ amortisation
(20X1-20X4)
(800) (533) (1,333)
Carrying amount 200 1,467 1,667
Impairment Loss (200) (107) (307)
Carrying amount after impairment loss 0 1,360 1,360
Example 3 - Deferred Tax Effects
A33. An enterprise has an asset with a carrying amount of Rs. 1,000 lakhs. Its
recoverable amount is Rs. 650 lakhs. The tax rate is 30% and the carrying amount