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BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
2. Summaryof significant accounting policies (cont’d)
2.12 Impairment of financial assets (cont’d)
(a)
Financial assets carried at amortised cost (cont’d)
To determine whether there is objective evidence that an impairment loss on financial assets has been
incurred, theGroupconsiders factors suchas theprobabilityof insolvencyor significant financial difficulties
of the debtor and default or significant delay in payments.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortised
cost at the reversal date. The amount of reversal is recognised in the profit or loss.
(b)
Financial assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where
the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an
impairment loss on a financial asset carried at cost has been incurred, the amount of the loss is measured
as thedifferencebetween theasset’s carryingamount and thepresent value of estimated future cash flows
discountedat the current market rate of return for a similar financial asset. Such impairment losses are not
reversed in subsequent periods.
(c)
Available-for-sale financial assets
In the case of equity investments classified as available-for-sale, objective evidence of impairment include
(i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an
adverse effect that have takenplace in the technological, market, economic or legal environment inwhich
the issuer operates, and indicates that the cost of the investment inequity instrument maynot be recovered;
and (iii) a significant or prolonged decline in the fair value of the investment below its costs. ‘Significant’
is to be evaluated against the original cost of the investment and ‘prolonged’ against the period inwhich
the fair value has been below its original cost.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost
(net of any principal payment and amortisation) and its current fair value, less any impairment loss
previously recognised in theprofit or loss, is transferred fromother comprehensive incomeand recognised
in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in the
profit or loss; increase in fair value after their impairment are recognised directly in other comprehensive
income.
2. Summaryof significant accounting policies (cont’d)
2.12 Impairment of financial assets (cont’d)
(c)
Available-for-sale financial assets (cont’d)
In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same
criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is
the cumulative loss measured as the difference between the amortised cost and the current fair value,
less any impairment loss on that investment previously recognised in profit or loss. Future interest income
continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest
used to discount the future cash flows for the purpose of measuring the impairment loss. The interest
income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument
increases and the increases can be objectively related toan event occurringafter the impairment losswas
recognised in profit or loss, the impairment loss is reversed in profit or loss.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and short-term, highly liquid investments
that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes
in value. These also include bank overdrafts that form an integral part of theGroup’s cashmanagement.
2.14 Inventories
Inventories, which are made up mainly materials, components and spares, are valued at the lower of cost
and net realisable value. Costs incurred in bringing the inventories to their present location and condition are
accounted for as follows:
-
Rawmaterials: purchase costs on aweighted averagemethod.
-
Finishedgoodsandwork-in-progress:costsofdirectmaterialsand labourandaproportionofmanufacturing
overheadsbasedonnormal operatingcapacity. Thesecostsareassignedonaweightedaveragemethod.
Where necessary, allowance is provided for damaged, obsolete and slowmoving items to adjust the carrying
value of inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary tomake the sale.
for the financial year ended 31december 2012
for the financial year ended 31december 2012
notestothe
financialstatements
notestothe
financialstatements
