BCZ113 Some support the principle of determining recoverable amount on an individual asset basis only. This view was expressed by a few commentators on E55. They argued that:

(a) it would be difficult to identify cash‑generating units at a level other than the business as a whole and, therefore, impairment losses would never be recognised for individual assets; and

(b) it should be possible to recognise an impairment loss, regardless of whether an asset generates cash inflows that are independent from those of other assets or groups of assets. Commentators quoted examples of assets that have become under‑utilised or obsolete but that are still in use.

BCZ114 IASC acknowledged that identifying the lowest level of independent cash inflows for a group of assets would involve judgement. However, IASC believed that the concept of cash‑generating units is a matter of fact: assets work together to generate cash flows.

BCZ115 In response to requests from commentators on E55, IAS 36 includes additional guidance and examples for identifying cash‑generating units and for determining the carrying amount of cash‑generating units. IAS 36 emphasises that cash‑generating units should be identified for the lowest level of aggregation of assets possible.