Use a Cash-Generating Unit

The following example illustrates how to use cash-generating units for a mining enterprise.

Use a Cash-Generating Unit for a Mining Enterprise

A mining enterprise owns a private railway to support its mining activities. The private railway can be sold only for scrap value and the private railway doesn't generate cash inflows from continuing use that are largely independent of the cash inflows from the other assets of the mine.

Problem	Solution	Implementation
It isn't possible to estimate the recoverable amount of the private railway because its value in use can't be determined, and probably is different from its value as scrap.	The entity needs to estimate the recoverable amount of the cash generating unit to which the railway provides service (the mine as a whole).	Create a cash-generating unit representing the entire mining enterprise so that the impairment loss can be calculated for the mine as a whole and allocated to all assets in that cash-generating unit.

Create a cash-generating unit representing the entire mining enterprise so that the impairment loss can be calculated for the mine as a whole and allocated to all assets in that cash-generating unit.