54
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.10 Impairment (cont’d)
(i)
Non-derivative financial assets (cont’d)
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both
a specific asset and collective level. All individually significant loans and receivables
are assessed for specific impairment. All individually significant receivables found
not to be specifically impaired are then collectively assessed for any impairment
that has been incurred but not yet identified. Loans and receivables that are
not individually significant are collectively assessed for impairment by grouping
together loans and receivables with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the
probability of default, the timing of recoveries and the amount of loss incurred,
adjusted for management’s judgement as to whether current economic and credit
conditions are such that the actual losses are likely to be greater or less than
suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows, discounted at the asset’s original
effective interest rate. Losses are recognised in profit or loss and reflected in an
allowance account against loans and receivables or held-to-maturity investment
securities. Interest on the impaired asset continues to be recognised. When the
Group considers that there are no realistic prospects of recovery of the asset,
the relevant amounts are written off. If the amount of impairment loss
subsequently decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, then the previously recognised
impairment loss is reversed through profit or loss.
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.10 Impairment (cont’d)
(i)
Non-derivative financial assets (cont’d)
Associates
An impairment loss in respect of an associate is measured by comparing the
recoverable amount of the investment with its carrying amount in accordance
with note 3.10(ii). An impairment loss is recognised in profit or loss. An impairment
loss is reversed if there has been a favourable change in the estimates used to
determine the recoverable amount.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than development
properties, inventories and deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated. For goodwill,
and intangible assets that have indefinite useful lives or that are not yet available
for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset or its related
cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its
fairvalue less costs to sell. In assessingvalue in use, the estimated future cash flows
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 or CGU. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Subject to an operating segment ceiling
test, for the purposes of goodwill impairment testing, CGUs to which goodwill has
been allocated are aggregated so that the level at which impairment testing is
performed reflects the lowest level at which goodwill is monitored for internal
reporting purposes. Goodwill acquired in a business combination is allocated to
groups of CGUs that are expected to benefit from the synergies of the combination.
