When we are testing an asset for impairment under US GAAP… While calculating the loss we have to use Fair Value of the asset. However, schweser says that when Fair Value is not available we can use Value-in-use (PV of future cashflows). I couldn’t find this anywhere in curriculum. What do you guys have to say about it?
It is there in the curriculum. If you have the ebooks, search for value in use.
It is there in the curriculum. If you have the ebooks, search for value in use.
Hey thanks for this. I could not find anything in the reading 18 - Long Lived assets. Can you tell me which reading/page no. are you referring to? Thanks in advance!
Page 65, section 4.1 - if you were looking, not looking very hard my friend.
Thank you for being specific 
However, I think I have not made my Q clear. The reference to ‘Value in use’ in this section is with regards to IAS (IFRS) and not US GAAP! And my post/question pertains to use of ‘Value in use’ when we calculate impairment as per US GAAP! IFRS Says- There is impaiment when Carrying value of asset is greater than the Recoverable amount. Recoverable amount here is defined as - the HIGHER of the Fairvalue (less selling costs) and Value in use (PV of future cash flow). Difference between Carrying value and Recoverable amount is the impairment loss! Thus, IFRS considers Value in use! US GAAP, on the other hand, does not consider ‘Value in use’! It considers only UNDISCOUNTED Cashflows. As per US GAAP: First step is to determine is there is any impairment- There is impairment when Carrying value of asset Greater than the Sum of the undiscounted future cashflows of that asset Once need for impairment is recognised, impairment loss is calculated as - Carrying value - Asset’s fair value. This is my understanding. And, here US GAAP does not say we need to consider ‘Value in use’. Schweser on the other hand says, as per US GAAP when asset’s fair value is not available, we can use ‘Value in use’! I would be more than happy if you can throw some light on this!
See the example that follows (in CFAI text) and you will see the treatment that the curriculum implies (I agree that it is written very poorly - and hence 3rd party providers like Schweser are in business).
Yes, I did go through all the examples. And I am pretty much cool with US GAAP treatment. This was in level1 as well. It’s just that since I could not find any thing where ValueInUse can be used for US GAAP and schweser says so (use Value in use if Fair value is not provided), I was curious. So I asked! I even asked a friend who has done ACCA (UK) and he also told me that in US GAAP there is nothing like use VALUE IN USE if you dont have fair value! Which made me even more curious! Do you feel that sometimes Schweser can be misleading? 
I sometimes feel so! Especially when they don’t provide much of explanation and assume you know it, it leads to lots of confusion! Just my views!
If you look at the example in CFAI (page 66) specifically part 4, they compute the impairment loss under IFRS and US GAAP. Under the USGAAP impairment computation, they take the PV (future CF) as fair value. Since PV (Future CF) = value in use (this you seem to know per your post above). This is exactly what Schweser says. Don’t know how this confuses you…
I do get your point my friend. But I never referred to that example in the first place. It so happens that in this case the ‘Fair value’ and the ‘Value In Use’ are same.
If you look at schweser, page 47, they have provided two different values - ‘Fair Value’ and ‘Value in use’! Just that in that example there is no impairment as per US GAAP! Had there been any, it would have been ‘Fair Value’ (and not ‘value in use’). Also, during L1 days, there was one example in CFAI Books in which they provided ‘Fair Value’ and ‘Present value of future cash flows’ as two different values.
This, my friend, is the cause of confusion and the reason behind my curiosity. My point has been totally different. I think I will let it be because looks like I am just not able to put across my point. 
And I hope on the exam they will provide same values for both as they did in example on page 66. By the way I appreciate the fact that you took out time and tried to help me out on this! Thanks a lot!