Operations Review - ChartNexus

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) Contingent liabilities and contingent assets
The Group and Company do not recognise a contingent liability but discloses its existence in the
financial statements. A contingent liability is a possible obligation that arises from past events
whose existence will be confirmed by uncertain future events beyond the control of the Group or
a present obligation that is not recognised because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also arises in the extremely rare
circumstance where there is a liability that cannot be recognised because it cannot be measured
reliably.
A contingent asset is a possible asset that arises from past events whose existence will be
confirmed by uncertain future events beyond the control of the Group. The Group does not
recognise contingent assets but discloses its existence where inflows of economic benefits are
probable, but not virtually certain.
In the acquisition of subsidiary companies by the Group under a business combination, the
contingent liabilities assumed are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interests.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating
the cost of a business combination where their fair values can be measured reliably. Where the fair
values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising
from the acquisition.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are
recognised separately at the date of acquisition at the higher of the amount that would be
recognised in accordance with the provisions of FRS 137 and the amount initially recognised less,
when appropriate, cumulative amortisation recognised in accordance with FRS 118.
(v) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or whenever events or circumstances occur indicating that an impairment may exist.
Property, plant and equipment and other non-current assets, including intangible assets, are
reviewed for impairment losses whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Impairment loss is recognised for the amount by which
the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is
measured at the higher of the fair value less cost to sell of an asset and its value-in-use. The value-
in-use is the net present value of the projected future cash flows derived from that asset discounted
at the appropriate discount rate. Assets other than goodwill that suffered an impairment are
reviewed for possible reversal at each reporting date.
The projected cash flows are based on the Group’s estimates calculated based on historical, industry
trend, general market, economic conditions and other available information. For the purposes of
assessing impairment, assets are grouped at the lowest level for which there is separately identifiable
cash flows.
PROTON 2009 ANNUAL REPORT
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