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Under Ind AS 36, the IMPAIRMENT review for player registrations of a sports club is challenging because:
AEach player must be individually impaired at the end of every reporting period
BImpairment of player registrations is the responsibility of the regulator, not the club
CIndividual players cannot generate cash flows on their own (in isolation) — they must be tested as part of the CASH-GENERATING UNIT (the team); only when a player is taken out of the CGU (e.g., career-ending injury, permanent removal) is individual impairment assessment meaningful
DPlayer registrations are exempt from impairment testing
Answer & Solution
Correct answer: C. Individual players cannot generate cash flows on their own (in isolation) — they must be tested as part of the CASH-GENERATING UNIT (the team); only when a player is taken out of the CGU (e.g., career-ending injury, permanent removal) is individual impairment assessment meaningful
Ind AS 36 — impairment is assessed at CGU level when the asset cannot independently generate cash flows. A cricket / hockey team is the CGU for players (no individual player generates cash flows alone). Annual CGU-level impairment tests apply (especially for intangibles with indefinite useful life). When a player is permanently removed from the CGU (career-ending injury, permanent exclusion), individual assessment becomes possible — carrying amount vs FV less costs to sell.
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