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BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
2. Summaryof significant accounting policies (cont’d)
2.9 Goodwill (cont’d)
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating
unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative fair values of the operation disposed of and the portion of the
cash-generating unit retained.
2.10 Impairment of non-financial assets
TheGroupassesses at each reportingdatewhether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, theGroupmakes an estimate
of the asset’s recoverable amount.
Anasset’s recoverableamount is the higher of anasset’s or cash-generating unit’s fair value less costs to sell 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 group 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 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 valuation multiples or other
available fair value indicators.
TheGroup bases its impairment calculation on detailed budgets and forecast calculations which are prepared
separately for each of the Group’s cash-generating units to which the individual assets are allocated. These
budgets and forecast calculations are generally coveringaperiod 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 the profit or loss in those expense categories
consistent with the function of the impaired asset, except for assets that are previously revalued where the
revaluationwas 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
indicator exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverableamount since the last impairment losswas recognised. If that is the case, the carryingamount
of the asset is increased to its recoverable amount. That increase cannot exceed the carryingamount that would
have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal
is recognised in the profit and loss unless the asset is measured at revalued amount, inwhich case the reversal
is treated as a revaluation increase.
2. Summaryof significant accounting policies (cont’d)
2.11 Financial assets
Initial recognition andmeasurement
Financial assets are recognisedwhen, and onlywhen, theGroupbecomes aparty to the contractual provisions
of the financial instrument. TheGroup determines the classification of its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial
assets designated upon initial recognitionat fair value throughprofit or loss. Financial assets are classified
as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This
category includes derivative financial instruments entered into by the Group that are not designated
as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, including separated
embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
TheGroup has not designated any financial assets upon initial recognition at fair value through profit or
loss.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair
value. Anygains or losses arising from changes in fair valueof the financial assets are recognised inprofit
or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange
differences, interest and dividend income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair
value if their economic characteristics and risks arenot closely related to thoseof thehost contracts and the
host contracts are not held for trading or designated at fair value through profit or loss. These embedded
derivatives aremeasuredat fair valuewith changes in fair value recognised inprofit or loss. Reassessment
only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that
would otherwise be required.
for the financial year ended 31december 2012
for the financial year ended 31december 2012
notestothe
financialstatements
notestothe
financialstatements
