Impairment of ROU asset + Fixed assets
Posted: 25 Jan 2022, 05:03
Hi All
In assessing the recoverable amount of rou asset + fixed asset, a cashflow forecast of 5 yrs + terminal is prepared. The ROU asset has a remaining of 1 yr life as at year end and constitute 80% of the total assets. Currently, an extension of lease assets is expected. However this extension of lease assets will be scope out of ifrs16 given that the renewal is structured on variable basis. ie % of sales.
In this case, is it still appropriate to forecast the cash flow based on a period of 5 yr + terminal in arriving at the recoverable amount for impairment assessment? Or should forecast based on the remaining life of rou which us one yr 1?
Thanks for guidance in advance.
In assessing the recoverable amount of rou asset + fixed asset, a cashflow forecast of 5 yrs + terminal is prepared. The ROU asset has a remaining of 1 yr life as at year end and constitute 80% of the total assets. Currently, an extension of lease assets is expected. However this extension of lease assets will be scope out of ifrs16 given that the renewal is structured on variable basis. ie % of sales.
In this case, is it still appropriate to forecast the cash flow based on a period of 5 yr + terminal in arriving at the recoverable amount for impairment assessment? Or should forecast based on the remaining life of rou which us one yr 1?
Thanks for guidance in advance.