The term \u201ccash-generating unit\u201d or \u201cCGU\u201d is something you come upon when talking about performing an impairment tests for asset or group of assets, that is when you\u2019re assessing whether the assets recoverable amount is lower of its carrying value and whether it is highest of the two, fair value less cost to sell or its value in use.\u00a0<\/p>\n
By default the recoverable amount should be determined for an individual asset. However, there are often situations it\u2019s not possible. Mainly the reasons arise from the fact that if you\u2019re able to somehow measure the expenses relating to this specific asset (consumption of energy, investment required etc.), it\u2019s most probably pretty hard to separate those revenues for the specific asset. Obviously it comes down to whether it\u2019s part of the production and usage of the asset forms just an integral part of the production and the product you sell at the end or it produces products on it\u2019s own that you also sell and can measure separately as such.<\/p>\n
If you\u2019re not able to determine the cash flows for an individual asset, we come upon the term \u201ccash-generating unit\u201d that is defined as the smallest identifiable group of assets that generates cash flows that are largely independent of the cash flows from other assets or group of assets.<\/p>\n
It is also mentioned that cash-generating unit is something that you\u2019d normally measure in ordinary course of business and your processes when assessing the company\u2019s performance as such.<\/p>\n","protected":false},"excerpt":{"rendered":"
The term \u201ccash-generating unit\u201d or \u201cCGU\u201d is something you come upon when talking about performing an impairment tests for asset or group of assets, that is when you\u2019re assessing whether the assets recoverable amount is lower of its carrying value and whether it is highest of the two, fair value less cost to sell or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-4867","post","type-post","status-publish","format-standard","hentry","category-1-5-5-valuation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4867"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4867\/revisions"}],"predecessor-version":[{"id":4868,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4867\/revisions\/4868"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4867"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}