3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.8 Impairment of financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective evidence indicates that a loss event has occurred after the initial
recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that
can be estimated reliably.
An impairment loss in respect of loans and receivables is calculated as the difference between its carrying amount, and the
present value of the estimated future cash flows discounted at the original effective interest rate.
The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually
significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in the income statement. Any impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognised in the income statement.
3.9 Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets other than 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, the assets’ recoverable
amounts are estimated. Goodwill and other non-financial assets with infinite useful lives or not available for use, are tested
for impairment at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from
other assets and groups. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or cash-generating unit. Estimates of future cash flows do not include estimated future cash inflows or outflows that are
expected to arise from a future restructuring to which the Group is not yet committed.
Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, cash-generating units 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 cash-generating units that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which
case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit
(group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
70
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
