A Cash Generating Unit (CGU) is a key term commonly used in the context of financial and accounting standards like the International Financial Reporting Standards (IFRS). It represents the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The concept is crucial for determining impairment of assets and good treatment application of assets within organizations.

For example, a manufacturing company may consider one of its production lines as a CGU because it has a distinct production process and generates cash inflows independently of its other lines. When evaluating the value of its assets, the company would test the production line separately for impairment.

From a practical perspective, identifying CGUs helps in assessing the recoverability of assets by comparing the carrying amount of a CGU to its recoverable amount, which is the higher of fair value less costs to sell and value in use. When the carrying value of the CGU exceeds its recoverable amount, an impairment loss is recognized. Financial analysts, auditors, and management professionals often use this concept.