Cash-Generating Units (CGUs)

A Cash-Generating Unit (CGU) is the smallest identifiable group of assets that generates cash inflows independently of other assets. It could be a single asset or a combination of assets, like a product line or a branch. Companies use CGUs to assess whether the assets are worth more than their current book value, especially when testing for impairment or loss. Essentially, a CGU helps determine how much a part of the business is truly valuable on its own, enabling accurate financial reporting and decision-making regarding asset management.