Recoverable amount definition
/What is Recoverable Amount?
Recoverable amount is the greater of an asset's fair value less costs to sell, or its value in use. Fair value less costs to sell refers to the price at which an asset would sell on the market right now, minus any related selling costs (such as a commission). Value in use refers to the present value of future cash flows expected to be derived from an asset. Thus, the concept essentially focuses on the greatest value that can be obtained from an asset, either by selling or using it.
The recoverable amount concept is an integral part of the impairment analysis process. An impairment loss arises when an asset has a higher carrying amount than its recoverable amount. Conversely, if the asset has a lower carrying amount than its recoverable amount, then there is no asset impairment.