Calculation of Recoverable Amount, Value-in-use and Fair Value less Disposal Cost

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:

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CORPORATE ACCOUNTING
Table of Contents
Part A............................................................................................................................... 2
Introduction...................................................................................................................2
Calculation of the “Recoverable Amount, “Value-in-use” and “Fair value less disposal
cost”..............................................................................................................................3
Conclusion....................................................................................................................7
Part B............................................................................................................................... 8
Reference List................................................................................................................10

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CORPORATE ACCOUNTING
Part A
Introduction
The essay that has been taken into consideration has the intention of providing
an explanation of the process that is used in order to compute the “recoverable
amount”, the “value-in-use” and the “fair value less the disposal cost”. The companies
that are opertsational in the economy looks to maintain their financial records and
therefore constructs financial statements where all the transactions and the financial
assets and liabilities are recorded. The assets need to be given additional assistance in
order to value them in a precise way in order to understand the profit for the business in
a batter way. Therefore, the calculation of the above addressed terms is essential in
order to true and authentic financial reports.

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CORPORATE ACCOUNTING
Calculation of the “Recoverable Amount, “Value-in-use” and “Fair value less
disposal cost”
Recoverable Amount
This known to be a term related to accounts that addresses the asset market
value which is either higher or the value that is disclosed by the business enterprise
which are utilised in the current operational activities of the business. The concept of
this term is undertaken in order to have an understanding of the impairment of the fixed
assets (Baboukardos and Rimmel 2014). This amount is known as the optimum value,
which an asset can attain. In general there are two processes by taking help of which
this value can be computed and they are either by using the business asset or by the
sell off the asset.
The asset value of a firm is referred to the present value of the future cash flows
that is projected, that the asset makes use of. The value of the asset that is sold off is
referred to as the asset fair value deducted by the cost incurred to sell off the asset. The
recovered amount, which is seen to be higher of the two, is called the “recoverable
amount”. This amount is essential for the purpose of undertaking impairment.
“Recoverable amount” is regarded to be the highest value as the administration of a
company has the intention of selecting that alternative, which would be able to given out
the optimum capability (Price 2015).
The fundamentals of accounting ask the companies to main a record for their
activities within the balance sheet in circumstances when the “carrying value” of the
asset is more than the recovered amount. It is seen in circumstances like when a