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With reference to IPSA 26
(i) Explain what a Cash-Generating Asset is.
These assets that are held with the primary objective of generating a commercial return.
An asset generates a commercial return when it is deployed in a manner consistent with
that adopted by a profit-oriented entity. Holding an asset to generate a commercial return
indicates that an entity intends to generate positive cash inflows from the asset (or from
the cash-generating unit of which the asset is a part, and earn a commercial return that
reflects the risk involved in holding the asset. An asset may be held with the primary
objective of generating a commercial return, even though it does not meet that objective
during a particular reporting period.
(ii) Criteria that could be used to identity an asset that may be impaired.
An entity shall consider, as a minimum, the following indications: -
- External source of information
- Cessation, or near cessation, of the demand or heed for services provided by the
asset.
- Significant long term changes with an adverse effect on the entity have taken place
during the period or will take place in the near future, in the technology, legal or
government policy environment in which the entity operates.
- Internal sources of information
- Evidence is available of physical damage of an asset.
- Significant long-term changes with an adverse effect on the entity have taken place
during the period, or are expected to take place in the near future, in the extent to
which, or manner in which, an asset is used or is expected to be used. These changes
include the asset becoming idle, plans to discontinue or restructure the operation to
which an asset belongs, or plans to dispose of an asset before the previously
expected date and reassessing the useful life of an asset as finite rather than
indefinite.
- A decision to halt the construction of the asset before it is complete or in a usable
condition.
- Evidence is available from internal reporting that indicates that the service
performance of an asset is or will be significantly worse than expected
marto answered the question on February 15, 2019 at 05:38
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Additional information:
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Required:
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Date posted: February 14, 2019. Answers (1)
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Required:
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Date posted: February 14, 2019. Answers (1)
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Additional information:
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Required:
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Date posted: February 14, 2019. Answers (1)
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Date posted: February 14, 2019. Answers (1)
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Required:
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Date posted: February 14, 2019. Answers (1)
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Required:
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Date posted: February 14, 2019. Answers (1)
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Date posted: February 14, 2019. Answers (1)