Annual Report 10/11 - ACL Cables PLC

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements2.6.6 The Group assesses at each reporting date whether there is an indication that an assetmay be impaired. If any such indication exists, or when annual impairment testing for an asset isrequired, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverableamount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and itsvalue in use and is determined for an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets or groups of assets. Where thecarrying amount of an asset exceeds its recoverable amount, the asset is considered impairedand is written down to its recoverable amount. In assessing value in use, the estimated futurecash flows are discounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset. Impairmentlosses recognized in prior periods are assessed at each reporting date for any indications that theloss has decreased or no longer exists. An impairment loss is reversed if there has been a changein the estimates used to determine the recoverable amount. An impairment loss is reversed only tothe extent that the asset’s carrying amount does not exceed the carrying amount that would havebeen determined, net of depreciation or amortization, if no impairment loss had been recognized.An assessment is made at each reporting date as to whether there is any indication that previouslyrecognized impairment losses may no longer exist or may have decreased. Previously recognizedimpairment losses, are reversed only if there has been an increase in the recoverable amount ofthe asset. Such increase is recognized to the extent of the carrying amount had no impairmentlosses been recognized previously.For goodwill, recoverable amount is estimated at each balance sheet date or as and when anindication of impairment is identified.Impairment losses are recognized in respect of subsidiaries acquired, are allocated first to reducethe carrying amount of any goodwill allocated to the entity and then to reduce the carryingamount of the other assets in the entity on a pro-rata basis.Impairment losses are recognized in the income statement.2.6.7 Inventories are stated at the lower of cost and net realisable value. Cost is determined bythe weighted average method. The cost of the inventory comprises purchase price, taxes (otherthan those subsequently recoverable by the Company from the tax authorities), and transport,handling and other costs directly attributable to the acquisition of finished goods. It excludes theborrowing costs. Trade discounts, rebates and other similar items are deducted in determining thecosts of purchase. Net realisable value is the estimate of the selling price in the ordinary course ofbusiness, less the costs of completion and selling expenses.2.6.8 Trade and other receivables are stated at the amounts estimated to realize, net ofprovision for bad and doubtful debts.Amounts due from related Companies are stated at cost.54