IAS 36 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Recoverable amount: fair value less costs of disposal and value in use
Value in use of a packaging line: projections, exclusions and rate
Section 1 of 8
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 36 workpaper
- Level
- Intermediate
- Estimated time
- ≈ 45 min
- Progress
- 0 / 4 steps done (review excluded)
Context
Verrerie des Alpilles (a fictitious company) produces and packages glass bottles. Its Bora packaging line, which sells its output to external customers, is the unit tested. The lasting rise in energy costs is an indication of impairment at 31 December 20X3; the carrying amount of the line is 2,500,000 and its remaining useful life 5 years.
Assignment
Workpaper Recoverable amount.
Purpose of the workpaper
Determine fair value less costs of disposal (only incremental costs not recognised as liabilities), project the value-in-use cash flows for the asset in its current condition (without uncommitted restructuring, financing or tax), discount them at the pre-tax rate, retain the higher of the two amounts and document the key assumptions.
Questions of the file covered by this workpaper
- Calculate the net cash flows used, their present values and the value in use of the line.
- Which discount rate do you use? Why?
- Determine fair value less costs of disposal, the recoverable amount and the impairment loss.
Documents in the file
Open the documents to pick out the relevant information.