Barking, an unlisted company, operates in the house building and commercial property investment development sector. The sector has seen an upturn in activity during recent years, and the directors have been considering future plans with a view to determining their impact on the financial statements for the financial year to 30 November 2007. The directors intend to carry out an impairment review as at 30 November 2007 in order to ascertain whether the carrying amount of a group of assets can be supported by their value in use. The plan is to produce cash flow projections up to 2014 with an average discount rate of 15% being used in the calculations. The 10-year period is to be used as it reflects fairly the long-term nature of the assets being assessed. Any subsequent impairment loss is to be charged against the income statement.
Comment on the impairment review to be performed.