Entity F is involved in the generation and distribution of electricity. Management are reviewing all of its assets for impairment as a result of a fall in the market price of electricity. One of entity F’s power stations, which is two years old, has a carrying value of EUR 5m and a value in use of EUR 4.4m taking into account the revised electricity price. The market for these assets is an active one, as investors are keen to enter the market to pursue the opportunities arising from market deregulation. A similar asset was recently sold to a US-based power utility for EUR 5.2m. The estimated incremental costs that would be directly attributable to the disposal are EUR 100,000. Management have no intention of selling the power station and are proposing to recognise an impairment charge based on its value in use. 

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