Calculation of recoverable amount
The recoverable amount of an asset is the greater of
its fair value less costs of disposal and value in use.
In assessing value in use, the estimated future cash
51 flows are discounted to their present values using a
discount rate that reflects current market assessments
of the time value of money and the risks specific
to the asset. Where an asset does not generate cash
inflows which are largely independent of those from
other assets, the recoverable amount is determined
for the smallest group of assets that generate cash
inflows independently (i.e. a cash-generating unit).
Recognition of impairment losses
An impairment loss is recognised in the Statement of
Comprehensive Income if the carrying amount of an
asset, or the cash-generating unit to which it belongs,
exceeds its recoverable amount. Impairment losses
are recognised to reduce the carrying amount of the
asset or assets in the cash-generating unit on a pro
rata basis, except that the carrying value of an asset
will not be reduced below its individual fair value
less costs of disposal (if measurable), or value in use
(if determinable).
Reversal of impairment losses
An impairment loss is reversed if there has been a
favourable change in the estimates used to determine
the recoverable amount of an asset. A reversal of
an impairment loss is limited to the assets carrying
amount that would have been determined had no
impairment loss been recognised in prior years.
Reversals of impairment losses are credited to the
Statement of Comprehensive Income in the year in
which the reversals are recognised.
2022-23 Financial Report Hong Kong Baptist University
