Document ID: chunk:federal_register_of_legislation:F2023C00180:front:0:p61
Version: federal_register_of_legislation:F2023C00180
Segment Type: other
Provision Reference: 
Character Range: 181562–185172

the cash-generating units are a reasonable indication of the proportion of the headquarters building devoted to each cash-generating unit. The carrying amount of the research centre cannot be allocated on a reasonable basis to the individual cash-generating units.
IE71 The remaining estimated useful life of cash-generating unit A is 10 years. The remaining useful lives of B, C and the headquarters are 20 years. The headquarters is depreciated on a straight-line basis.
IE72 The recoverable amount (ie higher of value in use and fair value less costs of disposal) of each cash-generating unit is based on its value in use. Value in use is calculated using a pre-tax discount rate of 15 per cent.

Identification of corporate assets
IE73 In accordance with paragraph 102 of AASB 136, M first identifies all the corporate assets that relate to the individual cash-generating units under review. The corporate assets are the headquarters building and the research centre.
IE74 M then decides how to deal with each of the corporate assets:
(a) the carrying amount of the headquarters building can be allocated on a reasonable and consistent basis to the cash-generating units under review; and
(b) the carrying amount of the research centre cannot be allocated on a reasonable and consistent basis to the individual cash-generating units under review.

Allocation of corporate assets
IE75 The carrying amount of the headquarters building is allocated to the carrying amount of each individual cash-generating unit. A weighted allocation basis is used because the estimated remaining useful life of A's cash-generating unit is 10 years, whereas the estimated remaining useful lives of B and C's cash-generating units are 20 years.
Schedule 1. Calculation of a weighted allocation of the carrying amount of the headquarters building

End of 20X0                                                                             A                    B       C       Total

                                                                                        CU                   CU      CU      CU

Carrying amount                                                                         100                  150     200     450
Useful life                                                                  10 years   20 years   20 years
Weighting based on useful life                                                          1                    2       2
Carrying amount after weighting                                                         100                  300     400     800
Pro-rata allocation of the building                                                     12%                  38%     50%     100%
(100/800)                                                                    (300/800)  (400/800)
Allocation of the carrying amount of the building (based on pro-rata above)             19                   56      75      150
Carrying amount (after allocation of the building)                                      119                  206     275     600

Determination of recoverable amount and calculation of impairment losses
IE76 Paragraph 102 of AASB 136 requires first that the recoverable amount of each individual cash-generating unit be compared with its carrying amount, including the portion of the carrying amount of the headquarters building allocated to the unit, and any resulting impairment loss recognised. Paragraph 102 of AASB 136 then requires the recoverable amount of M as a whole (ie the smallest group of cash-generating units that includes the research centre) to be compared