Egyptian Resorts Company “Egyptian Joint Stock ... - ERC Egypt

- 6 - Translated & OriginallyIssued in Arabican impairment loss related to financial asset which has been measured atamortized cost is calculated based on the difference between the bookvalue and the present value of estimated future cash flows discounted at thecurrent interest price.Individually significant financial assets are tested for impairment on anindividual basis. The remaining financial assets are assessed collectively ingroups that share similar credit risk characteristics.All impairment losses are recognized in the income statement.An impairment loss is reversed if the reversal can be related objectively toan event occurring after the impairment loss was recognized for financialassets measured at amortized cost and financial assets considered as debtinstrument is recognized in the income statement.B- Non-financial assets The carrying amounts of the non-financial assets, other than inventory anddeferred tax assets are reviewed at the balance sheet date to determinewhether there is any indication of impairment. If any such indication existsthen the asset’s recoverable amount is estimated.An impairment loss is recognized if the carrying amount of an asset or itscash-generating unit exceeds its recoverable amount. A cash-generatingunit is the smallest identifiable asset group that generates cash flows thatlargely are independent from other assets and groups. Impairment lossesare recognized in the income statement.The recoverable amount of an asset or cash-generating unit is the greater ofits 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 usinga pre-tax discount rate that reflects current market assessments of the timevalue of money and the risks specific to the asset.An impairment loss is reversed if there has been a change in the estimatesused to determine the recoverable amount. An impairment loss is reversedonly to the extent that the asset’s carrying amount does not exceed thecarrying amount that would have been determined, net of depreciation oramortization, if no impairment loss had been recognized.3-11 ProvisionsA provision is recognized in the balance sheet when the Company has a legalor constructive obligation as a result of past events, and it is probable that anoutflow of economic benefits will be required to settle the obligation and areliable estimate of the amount can be made. If the effect is material,provisions are determined by discounting the expected future cash flows at apre-tax to take such effect into consideration in which reflects the currentestimate of the monetary value in the market and the risks related to thisliability if it’s suitable. Provisions are reviewed at each balance sheet date andadjusted, (if required), to reflect the best current estimate.