Fair Value Less Costs of Disposal

Definition

The amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. Under IAS 36, it is one of two measures used to determine the recoverable amount for impairment testing. Costs of disposal include legal fees, stamp duty, and costs of removing the asset, but exclude financing costs and income tax. When a binding sale agreement exists, fair value less costs of disposal is based on the agreed price.