FRONTLINE COVER FA 070606 CR2.indd

frontline technologies corporation ltd
annual report 2006 79
> notes to the financial statement
for the year ended 31 march 2006
19. Goodwill on acquisition
Group
$
Cost:
At April 1, 2005 21,874,766
Elimination of amortisation accumulated prior
to the adoption of FRS 103 (4,103,838)
Arising on acquisition of a subsidiary 712,683
Translation reserves 8,933
18,492,544
Impairment loss recognised in the year ended March 31, 2006 (36,231)
At March 31, 2006 18,456,313
Amortisation:
At April 1, 2005 4,103,838
Elimination of amortisation accumulated prior
to the adoption of FRS 103 (4,103,838)
–
Carrying amount as at March 31, 2005 17,770,928
Amortisation for year ended March 31, 2005 1,444,062
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“CGUs”) that are
expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of
goodwill had been allocated as follows:
Group
2006 2005
$ $
Single entities:
Ecquaria Ltd 3,906,544 3,906,544
IT Holdings, Inc. 2,084,716 1,918,883
IT Holdings, Inc.’s subsidiary 138,673 130,006
MDCL – Frontline (China) Ltd 6,599,582 6,599,582
Accel Frontline Ltd 5,484,798 4,936,560
Accel Frontline Ltd’s subsidiary 36,231 37,353
Frontline Outsourcing (Asia) Pte Ltd 242,000 242,000
18,492,544 17,770,928
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be
impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the
value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices
and direct costs during the period. Management estimates discount rates using pre-tax rates specific to the CGUs.
The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past
practices and expectations of future changes in the market.