Entity E owns a large number of dairy farms in Italy. It has a number of factories that are used to produce milk products that are then sent to other factories to be converted into milk-based products such as yoghurt and custard. In applying IAS 36, the accountant of entity E is concerned about correctly identifying the cash-generating units (CGUs) for the entity, and has sought your advice on such questions as to whether the milk production section is a separate CGU even though the entity does not sell milk directly to other parties, or whether it should be included in the milk-based products CGU. 

(a) Define CGU; 

(b) Explain why impairment testing requires the use of CGU instead of a single asset; 

(c) Explain the factors that should be considered in determining the CGUs for entity E.