A measure of recoverable amount that is calculated using either the ‘value in use’ (VIU) methodology or the ‘fair value less costs of disposal’ (FVLCD) methodology. The recoverable amount is defined as the higher of these two values: ‘value in use’ (VIU) and ‘fair value less costs of disposal’ (FVLCD).
If the carrying value of an asset is determined to be higher than its recoverable amount (a case of impairment resulting in an impairment loss), the asset would be written down to the net recoverable amount with a charge to income in the period in which this finding is reached.
Net recoverable amount usually refers to the estimated sales price/ disposal price of an asset in the ordinary course of business less any estimated costs of sale. In mainstream practice, net recoverable amount denotes the scrap value of an asset.
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