EDC PR 2016 (FS section)

Financial Statement
In June 2015, a reassessment was made by the management which resulted to a change in the
estimated useful life of the Burgos Wind Power Plant from 20 years to 25 years (see Note 12).
The carrying amount of the property, plant and equipment excluding land and construction in
progress amounted to ₱79,486.5 million and ₱77,981.2 million as of December 31, 2016 and
2015, respectively (see Note 12). The carrying amount of water rights and other intangible assets
amounted to ₱1,471.2 million and ₱1,638.0 million as of December 31, 2016 and 2015,
respectively (see Note 13).
Impairment of Non-financial Assets other than Goodwill
The Company assesses impairment on these non-financial assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. The factors
that the Company considers important which could trigger an impairment review include the
following:
significant under-performance relative to expected historical or projected future operating
results;
significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
significant negative industry or economic trends.
The Company assesses whether there are any indicators of impairment for all non-financial assets,
other than goodwill, at each financial reporting date.
The Company recognizes an impairment loss whenever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is computed using the value in use (VIU) approach.
Recoverable amount is estimated for an individual asset or, if it is not possible, for the
cash-generating unit (CGU) to which the asset belongs. In the case of input VAT, where the
collection of tax claims is uncertain, the Company provides and allowance for impairment of input
VAT based on the assessment of management and Company’s legal counsel.
The Company recorded a provision for impairment of input VAT of ₱50.6 million, ₱61.8 million
and ₱53.4 million in 2016, 2015 and 2014, respectively (see Notes 15 and 22). The carrying
amount of input VAT amounted to ₱4,080.7 million and ₱4,132.1 million as of
December 31, 2016 and 2015, respectively (see Note 15).
Loss on direct write-off of input VAT claims amounting to ₱56.8 million, ₱131.4 million and
₱234.2 million in 2016, 2015 and 2014, respectively, are included in “Miscellaneous Income
(Charges)” in the consolidated statements of income (see Note 26).
For property, plant and equipment and intangible assets, when VIU calculations
are undertaken, management estimates the expected future cash flows from the asset or
CGU and discounts such cash flows using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset to calculate the present
value as of the financial reporting date.
Management also makes an assessment whether previously recognized impairment loss should be
reversed. Reversal of an impairment loss is recognized when there is an increase in the estimated
service potential of an asset, either from use or from sale, since the date when the Company last
recognized an impairment loss for that asset.
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