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Unformatted text preview: ns. If management wanted to sell off part of the business but still keep a viable business remaining, how could the business be broken down into parts that could be sold off? the existence of an active market for the output produced even if some or all of the output is used internally. In this case, the milk produced is not sold to the public or other entities but is used to make further milk products. However, as there is an active market for milk, the milk production section is potentially a separate CGU. This is because the assets in that section could generate cash flows independently of the rest of the entity. Internal transfer prices should not be used to determine recoverable amount unless these reflect the best estimate of prices that could be achieved in arm’s length transactions. 2 20. Aster City Council
Note definition of “cash‐generating unit” in AASB 136. It is possible to determine the profitability of each route as costs and revenues can be isolated to each route. However, as the council contracts for a package of routes, it is not possible to stop operating a single route in the package...
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This homework help was uploaded on 04/04/2014 for the course ACCY 200 taught by Professor Kevin during the Three '12 term at University of Wollongong, Australia.
- Three '12
- Financial Accounting