Corporate Accounting: Computation of Recoverable Amount, Value-in-use and Fair Value less Disposable 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
Computation of “Recoverable Amount”, “Value-in-use” and “Fair Value less
disposable cost”............................................................................................................3
Conclusion....................................................................................................................7
Part B............................................................................................................................... 8
Reference List................................................................................................................10

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CORPORATE ACCOUNTING
Part A
Introduction
This section of the paper constitutes of preparing an essay that would look to
address the method and the system that is used in order to evaluate “recoverable
amount”, “fair value less the cost of disposal” and “value-in-use”. Each and every
organization in order to maintain their effective level of business constructs financial
statements and records in order to have an understanding of the effectiveness of the
companies and accordingly take measures with the help of which they can improve their
financial activities (Price 2015). The terms that would be explained in this essay are
associated to impairment of assets that are done by the companies when essential.
These terms have significant values and therefore the companies look to evaluate these
values and amount in order to undertake the decisions related to the option that would
be chosen for the purpose of moving the business forward.

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CORPORATE ACCOUNTING
Computation of “Recoverable Amount”, “Value-in-use” and “Fair Value less
disposable cost”
Recoverable Amount
The word that has been mentioned above is a financial word and “recoverable
amount” of an asset is known to be the greater of the “fair value less expenses to sell”
and the “value-in-use”. In order to measure and evaluate the impairment, the carrying
value of the assets is undertaken with a comparison with their recoverable amount
(Basu 2017).
The recoverable amount is ascertained for each and every asset. Conversely,
Whittington (2015) explained that if an asset is unable to create inflow of cash that are
mostly free and independent in nature with respect to the ones from the other assets,
the “recoverable amount” is ascertained for the “cash generating unit” within which the
asset fits. The “cash generating unit” is the lowest and the smallest recognisable group
of asset that creates inflow of cash that are mostly free of the inflow of cash from the
other assets or the group of assets. The “recoverable amount” is a significant indicator
of impairment.