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A bus company operates SEVEN routes under a municipal contract requiring minimum service on each; route-level cash flows are separately identifiable; one route is loss-making. The CGU is:
AThree CGUs grouped by geography
BLoss-making route is excluded
CThe seven routes together = the bus company as a whole — because the entity has no option to curtail any single route, the smallest level of independent cash inflows is the seven routes together
DEach route individually
Answer & Solution
Correct answer: C. The seven routes together = the bus company as a whole — because the entity has no option to curtail any single route, the smallest level of independent cash inflows is the seven routes together
Same as illustration 16: independence-of-inflows test fails at the route level because the contract obliges all 7 routes — so the smallest independent unit is the entity. Identifiability of route-level inflows is irrelevant when curtailment is not an option.
Related questions
Identify the statement about CGU disclosure under Ind AS 36 that is INCORRECT.When an impairment loss recognised in a prior period for a CGU is REVERSED:When an impairment loss is allocated within a CGU, the order of allocation under Ind AS 36Multiple CGUs share the SAME key assumption (e.g. growth in a common end market) and the AAn entity's CGU recoverable amount is based on VIU. The discount rate disclosure required An entity uses a SENSITIVITY disclosure when a reasonably possible change in a key assumptWhen projecting cash flows beyond the period covered by management's most recent budgets/fWhen an entity discloses a CGU to which significant goodwill is allocated and recoverable