Unformatted text preview: ecasts. For some assets, there are no cash flows that are generated independently from those of other assets e.g. the milking machines or the machines used to separate cream from milk etc do not generate independent cash flows. The eventual cash flows come from the sale of the milk products. These machines could be sold separately, giving a fair value less costs to sell. However, as management have decided to use the machines rather than sell them, management have made the decision that the value in use is greater than the value via sale. 1 (iii) Explain the factors used in selecting a CGUs for an entity Cash flows must be independent of other cash flows A CGU must be the lowest aggregation of assets independently generating cash flows. Factors include (see paras 69‐71 of AASB 136): - - - how management monitors the entity’s operations: such as product lines, businesses, individual locations, districts or regional areas. How does management break down Fresh Milk Ltd – by factory? By dairy district? By product? how management makes decisions about continuing or disposing of the entity’s assets and operatio...
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- Three '12
- Financial Accounting, HO Building