Annual Report 2007 - Hmdatalink.com hm datalink

Notes to the consolidated financial statementsfor the year ended 31 December 20074. SIGNIFICANT ACCOUNTING POLICIES (Continued)(h)ImpairmentAt each balance sheet date, the Group reviews the carrying amounts of its assets to determinewhether there is any indication that those assets have suffered an impairment loss. If the recoverableamount of an asset is estimated to be less than its carrying amount, the carrying amount of the assetis reduced to its recoverable amount. Impairment loss is recognised as an expense immediately.Where an impairment loss subsequently reverses, the carrying amount of the asset is increased tothe revised estimate of its recoverable amount, but so that the increased carrying amount doesnot exceed the carrying amount that would have been determined had no impairment loss beenrecognised for the asset in prior years. A reversal of an impairment loss is recognised as incomeimmediately.(i)Cash equivalentsFor the purpose of consolidated cash flow statement, cash equivalents represent short-term highlyliquid investments which are readily convertible into known amounts of cash which are subject to aninsignificant risk of changes in value.(j)Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable for goods sold in thenormal course of businesses, net of discounts and related sales taxes.Income from sales of automobile parts and components is recognised when the products are deliveredand title has been passed.Interest income from financial asset is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the rate that exactly discounts theestimated future cash receipts through the expected life of the financial asset to that asset’s netcarrying amount.(k)TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from profitas reported in the consolidated income statement because it excludes items of income or expensethat are taxable or deductible in other years and it further excludes items that are never taxable ordeductible. The Group’s liability for current tax is calculated using tax rates that have been enacted orsubstantively enacted by the balance sheet date.GEELY AUTOMOBILE HOLDINGS LIMITED71ANNUAL REPORT 2 0 0 7