If the carrying amount exceeds the recoverable amount, the difference is recognised as an impairment loss. Value in use is calculated by discounting future cash flows at an appropriate rate.
Source: TMS 36
Related terms
Impairment of assetsRecognising as a loss the excess of an asset's carrying amount over its recoverable amount.Cash-generating unitThe smallest identifiable group of assets that generates cash inflows largely independent of those from other assets.Discounted cash flow (DCF)A valuation method based on discounting the free cash flows an asset or company will generate in the future to the present using an appropriate discount rate.Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.
Last updated: November 8, 2026 · This definition is for general information only.