Value in use

Value in use is a term from the Anglo-American accounting. According to IFRS or U.S. GAAP is the value in use is defined as the present value of future cash flows, which are achieved by the use of an asset, ie in contrast to the fair value of a subjective evaluation approach that reflects the individual benefit for the company.

Thus, for example, may be an old truck for a coal merchant a fairly high use value ( value in use ), while the objective market value of the car (fair value) may be comparatively small.

Example, the recognition of value in use and fair value in connection with business combinations under IFRS 3

When a company acquires the assets A and B ( € 1 million each value) for € 6 million, the assets at € 3 million, its value in use, are to be set ( No Business Combination within the meaning of IFRS 3; approach to value in use in accordance with IFRS 3.2 ( b)).

When a company acquires another company that owns the assets A and B, also with the same value and the same purchase price, assets with a fair value of € 1 million each are to be reported. The difference in the amount of € 4 million of goodwill ( business combination as defined by IFRS 3, measured at fair value ).

  • Accounting Law
  • Law ( United States)
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