Full annual report - African Bank - Investoreports

annual financial statements
payments. The related liability is recognised at an equivalent amount. Finance charges are accounted for over the
period of the transactions using the effective interest rate method.
Depreciation is charged to profit or loss on a straight-line basis and is calculated to reduce the original costs to the
expected residual values over the estimated useful lives. Useful lives and residual values are assessed on an annual
basis. Any adjustments that may be necessary are accounted for prospectively. Useful lives have been determined to
be as follows:
Computer equipment and software Two to five years
Office furniture and equipment Three to six years
Motor vehicles Four to five years
Leasehold improvements and capitalised leased assets Over the shorter of the lease term or its useful life
Buildings (owner occupied)
Land is not depreciated
Useful life (limited to 50 years)
All gains or losses arising on the disposal or scrapping of property and equipment are recognised in profit or loss in the
period of disposal or scrapping. Repairs and maintenance are charged to profit or loss when the expenditure is incurred.
4.7 Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment and when
an indicator for impairment exists. Intangible assets that are subject to amortisation and other non-financial assets
are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable.
An impairment loss is recognised in profit or loss for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher amount of an asset’s fair value less costs to sell and value
in use. Fair value less costs to sell is determined by ascertaining the current market value of an asset and deducting
any costs related to the realisation of the asset.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the
purposes of assessing impairment, assets that cannot be tested individually are grouped at the lowest levels for
which there are separately identifiable cash inflows from continuing use (cash-generating units). 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 amounts of the other assets in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other non-financial 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 through
profit or loss 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.
4.8 Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the
asset is available for immediate sale in its present condition. Management must be committed to the sale which
should be expected to qualify for recognition as a completed sale within 12 months from the date of classification.
African Bank Investments Limited | Integrated Report for the year ended 30 September 2012 237