Which of the following is a characteristic of recoverable amount?

Recoverable amount is defined as the higher of fair value less costs to sell and value in use. This means that the recoverable amount incorporates both the fair value of an asset (or cash-generating unit) and its value in use, which refers to the present value of future cash flows expected to be derived from the asset. By considering these two aspects, recoverable amount provides a comprehensive evaluation of the asset's worth, allowing for the best representation of its potential economic benefits.

In contrast, options that suggest it is based solely on fair value or determined solely by historical costs do not capture the full picture of how recoverable amount is assessed. The mention of net realizable value also does not align, as recoverable amount has a broader scope that incorporates potential future income rather than just the selling price of an asset in its current condition. Thus, understanding that recoverable amount includes both fair value and value in use is key to recognizing its role in asset impairment assessments.