CERTYNEX IFRS ACADEMY

Vernalis operates a plant producing insulation panels. At the end of 20X1, the market value of comparable equipment is stable. However, internal reporting shows that the plant's net cash flows are 30% below budget and that the parent had to grant it unexpected cash advances to fund its operations. What conclusion should the controller reach?

There is an indication of impairment, arising from internal sources of information.

There is no indication as long as the plant does not report operating losses for two consecutive years.

An indication exists only if the shortfall against budget exceeds 50%.

There is no indication, since the market value of the equipment has not declined.