FINANCIAL STATEMENTS - Mewah Group

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MEWAH INTERNATIONAL INC.NOTES TOTHE FINANCIAL STATEMENTSFor the financial year ended 31 December 20122. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.7 Impairment of non-financial assets(a) GoodwillGoodwill recognised separately as an intangible asset is tested for impairment annually and whenever there is indication thatthe goodwill may be impaired.For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”)expected to benefit from synergies arising from the business combination.An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amountof the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and thento the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period.(b) Property, plant and equipmentInvestments in subsidiaries and associated companiesProperty, plant and equipment and investments in subsidiaries and associated companies are tested for impairment wheneverthere is any objective evidence or indication that these assets may be impaired.For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the valuein-use)is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independentof those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs.If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of theasset (or CGU) is reduced to its recoverable amount.The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss,unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease. Pleaserefer to Note 2.4 for the treatment of a revaluation decrease in property, plant and equipment.An impairment loss for an asset other than goodwill is reversed only if, there has been a change in the estimates used to determinethe asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to itsrevised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined(net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revaluedamount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss onthe same revalued asset was previously recognised as an expense, a reversal of that impairment is also credited to profit or loss.56
ANNUAL REPORT 2012NOTES TOTHE FINANCIAL STATEMENTSFor the financial year ended 31 December 20122. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)2.8 Borrowing costsBorrowing costs are recognised in profit or loss using the effective interest method except for those costs that are directlyattributable to the acquisition, construction or production of a qualifying assets. Capitalising of borrowing costs commences whenthe activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs are beingincurred. Borrowing costs are capitalised until the assets are ready for their intended use or sale.Borrowing costs on general borrowings are capitalised by applying a capitalisation rate to the acquisition, construction orproduction of qualifying assets that are financed by general borrowings.2.9 Financial assets(a) ClassificationThe Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables,held-to-maturity, and available-for-sale. The classification depends on the nature of the asset and the purpose for which theassets were acquired. Management determines the classification of its financial assets at initial recognition and in the case ofassets classified as held-to-maturity, re-valuates this designation at each statement of financial position date.(i)Financial assets at fair value through profit or lossThis category has two sub-categories: financial assets held for trading, and those designated at fair value through profitor loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling inthe short term. Financial assets designated as at fair value through profit or loss at inception are those that are managedand their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy.Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category arepresented as current assets if they are either held for trading or are expected to be realised within 12 months after thestatement of financial position date.(ii) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market. They are presented as current assets, except for those expected to be realised later than 12 months afterthe statement of financial position date which are presented as non-current assets. Loans and receivables are presentedas “trade receivables” (Note 14), “other receivables” (Note 15) and “cash and cash equivalents” (Note 17) on thestatement of financial position.(iii) Held-to-maturity financial assetsHeld-to-maturity financial assets, are non-derivative financial assets with fixed or determinable payments and fixedmaturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group wereto sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted andreclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 monthsafter the statement of financial position date which are presented as current assets.57
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FINANCIAL STATEMENTS - Mewah Group

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