The IAS 36 Impairment of Assets impairment test for an individual asset requires that the carrying amount of the asset be compared to its recoverable amount. According to IAS 36, recoverable amount is defined as the higher of two items. Which one of the following correctly describes these two items?

Question 4 options:

1)	future cash flows from the asset and fair value of asset

2)	present value of future cash flows from the asset and fair value of the asset

3)	future cash flows from the asset and fair value of asset less costs of disposal

4)	present value of future cash flows from the asset and fair value of asset less costs of disposal