Consistent identification of units

Learning objectives

• Explain that units are identified consistently from period to period and the disclosures required in the event of a change.L2, L3

Normative references

• IAS 36 §72CGUs are identified consistently from period to period unless a change is justified.
• IAS 36 §73If an asset belongs to a CGU different from that of previous periods, or if the types of assets aggregated in the CGU have changed, paragraph 130 requires disclosures about the CGU when an impairment loss is recognised or reversed for it.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

8 questions

• True or false? From one year to the next, an entity identifies its cash-generating units for the same asset or types of assets consistently, unless a change is justified.L2
• True or false? An entity may freely redraw its CGUs at each reporting date, choosing the grouping of assets that avoids recognising an impairment loss.L2
• True or false? When an asset belongs to a CGU different from the one used in previous periods and an impairment loss is recognised for that CGU, the entity provides the information about the CGU required by paragraph 130 of IAS 36.L3
• True or false? Once settled, an entity's identification of CGUs can never be changed, even when a genuine reorganisation of its operations justifies it.L2
• Which principle does IAS 36 apply to the identification of CGUs from one period to the next?L2
• The types of assets aggregated in the South Logistics CGU of Transvalis changed during the year. Under IAS 36, in which case does this change lead to providing the information about the CGU required by paragraph 130?L3
• For several years, the Marivo hotel group has treated each of its hotels as a CGU. This year, the Brevanne hotel has a recoverable amount below its carrying amount. With no change in the operation, management or marketing of the hotels, management proposes to combine Brevanne with two highly profitable hotels in the same region so that the combination shows no loss. What is the appropriate conclusion?L3
• Textora operated two plants, each treated as a CGU. During the year, it genuinely merged the two sites: a single production line, a common customer base and integrated teams. The new combined operation is now tested as a single CGU, for which an impairment loss is recognised at the reporting date. Which analysis is correct?L3