Baker Technology LimitedAnnual Report 2014
93
2.
Summaryof significant accountingpolicies (cont’d)
2.11
Impairment of financial assets (cont’d)
(c)
Available-for-salefinancial assets (cont’d)
Ifanavailable-for-salefinancialasset is impaired,anamountcomprisingthedifferencebetween itscost(net
of anyprincipal payment andamortisation) and its current fair value, less any impairment losspreviously
recognised in theprofitor loss, is transferred fromother comprehensive incomeand recognised inprofit
or loss.Reversalsof impairment losses in respectofequity instrumentsarenot recognised in theprofitor
loss; increase in fairvalueafter their impairmentare recogniseddirectly inothercomprehensive income.
Inthecaseofdebt instrumentsclassifiedasavailable-for-sale, impairment isassessedbasedonthesame
criteriaasfinancialassetscarriedatamortisedcost.However, theamountrecorded for impairment isthe
cumulative lossmeasuredas thedifferencebetween theamortisedcost and thecurrent fair value, less
any impairment loss on that investment previously recognised inprofit or loss. Future interest income
continues tobeaccruedbasedon the reduced carryingamount of theasset, using the rateof interest
used todiscount the future cashflows for thepurposeofmeasuring the impairment loss. The interest
income is recordedaspartoffinance income. If, inasubsequentyear, the fairvalueofadebt instrument
increases and the increases canbeobjectively related toanevent occurringafter the impairment loss
was recognised inprofitor loss, the impairment loss is reversed inprofitor loss.
2.12
Cash and cashequivalents
Cashandcashequivalentscomprisecashonhand,demanddeposits,andshort-term,highly liquid investments
thatare readilyconvertible toknownamountsof cashandwhicharesubject toan insignificant riskof changes
in value. Thesealso includebankoverdrafts that forman integral part of theGroup’s cashmanagement.
2.13
Inventories
Inventories,whicharemadeupofmainlymaterials,componentsandspares,arevaluedatthe lowerofcostandnet
realisable value. Costs incurred inbringing the inventories to their present locationand conditionareaccounted
foras follows:
–
Rawmaterials: purchase costsonaweightedaveragemethod.
–
Finishedgoodsandwork-in-progress:costsofdirectmaterialsand labourandaproportionofmanufacturing
overheadsbasedonnormaloperatingcapacity.Thesecostsareassignedonaweightedaveragemethod.
Wherenecessary, allowance isprovided fordamaged, obsoleteand slowmoving items toadjust thecarrying
valueof inventories to the lower of cost andnet realisable value.
Net realisable value is theestimated sellingprice in theordinary courseof business, less estimated costs of
completionand theestimated costsnecessary tomake the sale.
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
