impairment of property, plant, and equipment

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Swissfox

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Hi,
I am really confused about a question from the CFAI topic test regarding the above-mentionned topic.
But before, let me explain what I understood from impairments:
IFRS: we impair PPE if carrying value>fair value-sell cost or carrying value>PV of expected future cash flow (whichever is greater).
I found the example 9 in the curriculum, chapter 30, more than useful and I thought that would be my reference for such exercices! They state that the value in use= PV of expected future cash flow.
Now…
I found that exercice:
A Canadian printing company that prepares its financial statements according to IFRS has experienced a decline in the demand for its products. The following information (in Canadian dollars) relates to the company’s printing equipment as of the current fiscal year end:
Carrying value of equipment (net book value) 500,000
Undiscounted expected future cash flows 550,000
Present value of expected future cash flows 450,000
Fair value 480,000
Costs to sell 50,000
Value in use 440,000
So ok, Undiscounted expected future cash flow is out, that’s for US-GAAP.
But now… I thought, according to the example 9 in the curriculum, that value in use=PV of expected future CF… which isn’t the case here…
So what is value to use? and why this “discrepancy” between the example 9 and this exercice?
Thanks! (ps: correct answer is 60’000
 
couldnt understand how they got 60,000 as the impairment loss as well.
Will go through the question in the corriculum myself..
 
they got this way the 60’000: Fair value less costs to sell: 480,000 – 50,000 = 430,000 Value in use = 440,000 Recoverable amount (higher value of the above two amounts) = 440,000 Impairment loss under IFRS = Carrying value (net book value) – recoverable amount Impairment loss = 500,000 – 440,000 = C$60,000
however, it’s still unclear why the value in use is another value than PV of discounted CF when in the curriculum, there’s an exemple where it’s the same…
 
I thought value in use was the PV of expected cash flows. Why are they given seperately here? And that too with different values? What sorcery is this?
 
Welcome to the club gigaloo ahah. No idea why. Some help would be needed
 
do you guys managed to understand what the discrepancy was? I don’t…
 
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