What general approach must be used for asset grouping under impairment test?

The correct approach for asset grouping under the impairment test involves grouping assets based on cash-generating units (CGUs). This means that assets are aggregated into groups that generate cash inflows independently of other assets or groups of assets. The rationale behind this is that it is often impractical for individual assets to be directly identifiable with specific cash flows, especially in a business context where assets may work together to produce revenue.

By using cash-generating units, companies can more accurately assess the recoverable amount of assets by ensuring that the impairment test reflects how assets contribute to generating cash flows. This grouping also aligns with accounting standards, which focus on identifying impairment at the level where cash inflows are largely independent.

While some approaches might suggest grouping by physical location, testing assets independently, or treating all assets as one single unit, these do not effectively capture the economic reality of how assets function in generating cash flows. Therefore, the cash-generating unit approach is the most appropriate and widely accepted practice for impairment testing.