Document ID: chunk:federal_register_of_legislation:F2023C00180:front:0:p27
Version: federal_register_of_legislation:F2023C00180
Segment Type: other
Provision Reference: 
Character Range: 66960–70822

carrying amount of any goodwill allocated to the cash-generating unit (group of units); and
(b) then, to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units).
These reductions in carrying amounts shall be treated as impairment losses on individual assets and recognised in accordance with paragraph 60.
105 In allocating an impairment loss in accordance with paragraph 104, an entity shall not reduce the carrying amount of an asset below the highest of:
(a) its fair value less costs of disposal (if measurable);
(b) its value in use (if determinable); and
(c) zero.
The amount of the impairment loss that would otherwise have been allocated to the asset shall be allocated pro rata to the other assets of the unit (group of units).
106 If it is not practicable to estimate the recoverable amount of each individual asset of a cash-generating unit, this Standard requires an arbitrary allocation of an impairment loss between the assets of that unit, other than goodwill, because all assets of a cash-generating unit work together.
107 If the recoverable amount of an individual asset cannot be determined (see paragraph 67):
(a) an impairment loss is recognised for the asset if its carrying amount is greater than the higher of its fair value less costs of disposal and the results of the allocation procedures described in paragraphs 104 and 105; and
(b) no impairment loss is recognised for the asset if the related cash-generating unit is not impaired. This applies even if the asset's fair value less costs of disposal is less than its carrying amount.

Example

A machine has suffered physical damage but is still working, although not as well as before it was damaged. The machine's fair value less costs of disposal is less than its carrying amount. The machine does not generate independent cash inflows. The smallest identifiable group of assets that includes the machine and generates cash inflows that are largely independent of the cash inflows from other assets is the production line to which the machine belongs. The recoverable amount of the production line shows that the production line taken as a whole is not impaired.
Assumption 1: budgets/forecasts approved by management reflect no commitment of management to replace the machine.
The recoverable amount of the machine alone cannot be estimated because the machine's value in use:
(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          may differ from its fair value less costs of disposal; and
(b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          can be determined only for the cash-generating unit to which the machine belongs (the production line).
The production line is not impaired. Therefore, no impairment loss is recognised for the machine. Nevertheless, the