Cash Generating Unit (CGU)

Definition

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets. Under IAS 36, when an individual asset's recoverable amount cannot be estimated in isolation, impairment testing is performed at the CGU level. Goodwill acquired in a business combination is allocated to CGUs or groups of CGUs expected to benefit from the synergies of the combination, and tested for impairment at that level annually.