Recognition and Measurement of Impairment Loss :
A29. The recoverable amount of the Country A cash-generating unit is 1,360 lakhs: the higher of the net selling price of the Country A cashgenerating unit (not determinable) and its value in use (Rs. 1,360 lakhs).
A30. T compares the recoverable amount of the Country A cash-generating unit to its carrying amount (see Schedule 3).
A31. T recognises an impairment loss of Rs. 307 lakhs immediately in the statement of profit and loss. The carrying amount of the goodwill that relates to the Country A operations is eliminated before reducing the carrying amount of other identifiable assets within the Country A cash-generating unit (see paragraph 87 of this Standard).
A32. Tax effects are accounted for separately in accordance with AS 22, Accounting for Taxes on Income.
Schedule 2. Calculation of the value in use of the Country A cash-generating unit at the end of 20X4 (Amount in Rs. lakhs)
| Year | Long-term growth rates | Future cash flows | Present value factor at 15% discount 15% discount rate(3) | Discounted future cash flows |
| 20X5 (n=1) | 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 | 1,360 |
(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.
(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 Total | 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 |