CMA Final · Corporate Financial Reporting · Property, Plant and Equipment (Ind AS 16)
Kaveri Engineering Ltd is evaluating a press for impairment. Its fair value less costs of disposal is ₹46 lakh and its value in use is ₹52 lakh. Its carrying amount is ₹55 lakh. Using the Ind AS 16 definition of recoverable amount, what is the recoverable amount?
The recoverable amount is ₹52 lakh. Ind AS defines recoverable amount as the higher of fair value less costs of disposal (₹46 lakh) and value in use (₹52 lakh), so the value in use is taken.
- A₹52 lakhCorrect
- B₹46 lakh
- C₹49 lakh
- D₹55 lakh
Explanation
Recoverable amount is the higher of fair value less costs of disposal and value in use. Higher of 46 and 52 is ₹52 lakh. The ₹46 lakh option wrongly takes the lower figure, and ₹49 lakh is a simple average, which is not the definition.
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