BAKERTECHNOLOGYLIMITED
ANNUALREPORT2013
89
Notes to the
Financial Statements
for the financial year ended 31December 2013
2.
Summaryof significantaccounting policies (cont’d)
2.8
Goodwill (cont’d)
The cash-generating units towhich goodwill have been allocated is tested for impairment annually andwhenever there is an
indication that the cash-generatingunitmay be impaired. Impairment is determined for goodwill by assessing the recoverable
amount of each cash-generatingunit (or groupof cash-generatingunits) towhich thegoodwill relates.Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss.
Impairment losses recognised for goodwill are not reversed in subsequent periods.
Wheregoodwill forms part of a cash-generatingunit andpart of theoperationwithin that cash-generatingunit is disposedof,
thegoodwill associatedwith theoperationdisposedof is included in the carrying amount of theoperationwhendetermining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance ismeasured based on the relative fair
values of the operation disposed of and the portion of the cash-generatingunit retained.
2.9
Impairment of non-financial assets
TheGroupassesses at each reportingdatewhether there is an indication that anassetmaybe impaired. If any indicationexists,
orwhenanannual impairment testing for anasset is required, theGroupmakes anestimateof theasset’s recoverableamount.
An asset’s recoverable amount is the higher of an asset’s or cash-generatingunit’s fair value less costs of disposal and its value
in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing 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 current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such
transactions canbe identified, an appropriate valuationmodel is used.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for
eachof theGroup’s cash-generatingunits towhich the individual assets areallocated. Thesebudgets and forecast calculations
are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project
future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued
where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other
comprehensive income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group
estimates the asset’s or cash-generatingunit’s recoverable amount. Apreviously recognised impairment loss is reversedonly if
therehas been a change in the estimates used todetermine the asset’s recoverable amount since the last impairment losswas
recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the
reversal is treated as a revaluation increase.
