IAS 36Chapter 5Lesson 2
Value in use (2): which cash flows to include?
Step 1 of 7Learning objectives
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Not every cash flow in a budget belongs in value in use. This lesson teaches how to build the cash flows (inflows from use, necessary outflows, allocable overheads, maintenance, final disposal cash flow), to reason on the asset in its current condition (no uncommitted restructuring, no enhancement), to exclude financing and tax, to stay consistent on inflation and to deal with foreign currency cash flows. A real budget is adjusted line by line up to the impairment loss and its entry.
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Learning objectives
- Identify the cash flows to include in value in use and those to exclude to avoid double counting.
- Treat a restructuring or an enhancement according to whether it is committed, and distinguish enhancement from maintenance.
- Exclude financing and tax cash flows and check consistency between cash flows and rate (nominal or real).
- Calculate value in use from an adjusted budget, including in a foreign currency, then the loss and its entry.