90 91
2.
Significant accounting policies (continued)
2.12 Impairment of Non-Financial Assets
(a)
Goodwill
Goodwill, recognised separately as an intangible asset is tested for impairment annually and whenever there is
indication that the goodwill may be impaired.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units
(“CGU”) expected to benefit from synergies arising from the business combination.
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable
amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU
and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.
An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period.
(b)
Investment in subsidiaries
Investment in subsidiaries is tested for impairment whenever there is any objective evidence or indication that the
asset may be impaired.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely
independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to
which the asset belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of
the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable
amount is recognised as an impairment loss in profit or loss.
In assessing the value-in-use, the estimated future cash flows expected to be generated by the asset are discounted
to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of
money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are
taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
These calculations are corroborated by capitalisation rates or other available fair value indicators.
The Group bases its impairment calculation on detailed rent-rolls and projections which are prepared separately for
each of the Group’s cash-generating units to which the individual assets are allocated. These rent rolls and projections
are generally covering a period of 5 years. For longer periods, a long term growth rate is calculated and applied to
project future cash flows after the fifth year.
An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates
used to determine the assets’ recoverable amount since the last impairment loss was recognised. The carrying amount
of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying
amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment
loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is
recognised in profit or loss.
