Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit (CGU), calculated by discounting projected cash flows at a rate reflecting the time value of money and asset-specific risks. Under IAS 36, it is one of the two components of recoverable amount (alongside fair value less costs to sell) used in impairment testing. Its construction — cash flow projections, discount rate, projection horizon — is subject to auditor scrutiny and must reflect management's best estimates of future conditions. It is conceptually equivalent to a DCF valuation applied to a specific asset or CGU.

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Example: the value in use of a Swiss industrial CGU is calculated on 5 years of projected cash flows (CHF 1.5M–2.2M) discounted at a 9.5% WACC, plus a terminal value at 2.0% growth. Value in use: CHF 18.5 million. Compared to CGU carrying value of CHF 16.0 million (including CHF 4.0 million allocated goodwill), the CHF 2.5 million headroom confirms no impairment is required for the current year under IAS 36.

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Hectelion calculates value in use for IAS 36 impairment testing, providing models that meet Big Four auditor standards for annual and trigger-event impairment reviews.