What does 30-32 require?

Value in use is computed in two steps: project the cash inflows and outflows expected from keeping the asset in use and from eventually disposing of it, then discount them at a suitable rate. Five elements must be captured: the cash flow estimate itself; expectations about how the amount or timing of those flows might vary; the time value of money, taken as the current risk-free market rate; the price the market charges for bearing the asset's inherent uncertainty; and other market factors, illiquidity among them, that participants would price in. Variability, the uncertainty price and the other factors may be built into either the cash flows or the discount rate, but whichever route is taken the result must be the probability-weighted average across all outcomes. Appendix A gives further guidance on present value techniques.

AASB 136 Impairment of Assets 30-32: Value in use...

Other controls in Measuring recoverable amount: fair value less disposal costs, value in use and the discount rate (paragraphs 18 to 57, Appendix A) – AASB 136 Impairment of Assets

18-23 Recoverable amount principles: it is the higher of fair value less disposal costs and value in use, only one needs measuring if it exceeds carrying amount, value in use may stand alone where fair value cannot be reliably measured and vice versa, and recoverable amount is measured per asset unless the asset's cash inflows are not largely independent, in which case per cash-generating unit
24 Carry forward the prior detailed recoverable amount calculation for an indefinite-life intangible only if its unit's assets and liabilities have not changed significantly, the prior calculation showed comfortable headroom over carrying amount, and events since make a shortfall remote
28-29 Costs of disposal: deduct incremental costs directly attributable to disposal (legal costs, stamp duty and similar taxes, removal costs, costs of readying the asset for sale) other than those already recognised as liabilities, but not termination benefits or post-disposal downsizing costs
33-38 Basis for cash flow projections: use reasonable and supportable assumptions representing management's best estimate with more weight on external evidence, start from the latest approved budgets or forecasts for at most five years unless a longer period is justified, exclude uncommitted restructurings and enhancements, and extrapolate beyond the budget period at a flat or falling growth rate capped at the long-term average for the product, industry, country or market unless a higher rate is justified
39-43 Composition of cash flows: include the inflows earned while the asset stays in use, the directly attributable or reasonably allocated outflows needed to earn them (day-to-day servicing, attributable overheads and remaining costs to finish an incomplete asset), and net disposal proceeds at the end of useful life; keep inflation treatment consistent with the discount rate; exclude inflows from independent assets and outflows for recognised liabilities
44-49 Project cash flows for the asset as it stands today: exclude the effects of restructurings the entity is not yet committed to and of future enhancements, include the benefits of a restructuring once committed under AASB 137 together with its provision, and include maintenance outflows and replacement of shorter-lived components as day-to-day servicing
50-54 Exclude financing cash flows and income tax from the projections, estimate end-of-life disposal proceeds on an arm's length basis using current prices for similar assets adjusted consistently for inflation, recognise that fair value ignores entity-specific synergies, rights and tax attributes, and estimate foreign currency cash flows in their own currency with a matching rate before translating at the spot rate
55-57,A15-A21 Discount rate: use a pre-tax rate reflecting the market's current pricing of money's time value and of asset-specific risks not already in the cash flows, derived from market rates for comparable assets or the cost of capital of a comparable listed entity, or from surrogates such as the entity's own cost of capital, incremental borrowing rate or other market rates adjusted for asset risk, country, currency and price risk and unaffected by the entity's capital structure

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MCP endpoint All AASB 136 Impairment of Assets controls