Cash generating unit the smallest identifiable group

 Cash-generating unit - The smallest identifiable group of assets that generates cash in-
flows that are largely independent of the cash in- flows from other assets or groups of
assets.
 Class of assets - A grouping of assets of a similar nature and use in an entity’s operations.
 Depreciation (amortization) - The systematic allocation of the depreciable amount of an
asset over its useful life.
 Recoverable amount - The higher of an asset’s (or cash-generating unit’s) fair value less
costs to sell and its value in use.
 Useful life - Either:
(a) The period over which an asset is expected to be available for use by an entity; or
(b) The number of production or similar units expected to be obtained from the asset by
the entity.
 Value in use - The present value of the future cash - flows expected to be derived from an
asset or cash generating unit.
IAS 37: Provisions, Contingent Liabilities and Contingent Assets
 Contingent asset A possible asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity
 Contingent liability
(a) A possible obligation that arises from past events and whose existence will be
conformed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity; or
IFRS and IAS Glossary of Terms 35

(b) A present obligation that arises from past events but is not recognized because:
(i) It is not probable that an out- owe of resources embodying economic
benefits will be required to settle the obligation; or
(ii) The amount of the obligation cannot be measured with sufficient
reliability
 Legal obligation - An obligation that derives from: (a) a contract (through its explicit or
implicit terms); (b) legislation; or (c) other operation of law
 Liability - A present obligation of the entity arising from past events, the settlement of
which is expected to result in an out- owe from the entity of resources embodying
economic benefits.
 Obligating event - An event that creates a legal or constructive obligation that results in
an entity having no realistic alternative to settling that obligation.
 Obligation - A duty or responsibility to act or perform in a certain way. Obligations may
be legally enforceable as a consequence of a binding contract or statutory requirement.
Obligations also arise, however, from normal business practice, custom and a desire to
maintain good business relations or act in an equitable manner.
 Offsetting - See ‘set-off, legal right of’’
 Onerous contract - A contract in which the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it
 Provision - A liability of uncertain timing or amount.