The first stage of impairment testing of a long-lived asset is to take the present value of the future cash flows generated by the asset.

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The first stage of impairment testing of a long-lived asset typically involves comparing the carrying amount of the asset to its recoverable amount, which is the higher of its fair value less costs to sell and its value in use (not merely taking the present value of future cash flows).

The First Stage of Impairment Testing of a Long-Lived Asset