annual report 2014
I
Notes to the Financial Statements
31 December 2014 (Cont’d)
67
4.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
4.5 Investments in subsidiaries (Cont’d)
Equity loan
Equity loan represents non-trade loan granted by the Company to a subsidiary for which settlement is neither
planned nor likely to occur in the foreseeable future and is intended to provide the subsidiary with a long-term
source of additional capital. It is, in substance, an addition to the investment in the subsidiary of the Company
and accordingly, is accounted for in accordance with MFRS 127
Separate Financial Statements
as part of the
investment in the subsidiary and measured at cost.
4.6 Impairment of non-financial assets
The carrying amount of assets, except for financial assets (excluding investments in subsidiaries) and inventories,
are reviewed at the end of each reporting period to determine whether there is any indication of impairment.
If any such indication exists, the asset’s recoverable amount is estimated.
The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate
the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit
(“CGU”) to which the asset belongs.
The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use.
In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing
use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset
for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in profit
or loss when the carrying amount of the asset or the CGU exceeds the recoverable amount of the asset or
the CGU. The total impairment loss is allocated to reduce the carrying amount of the assets of the CGU on a
pro-rata basis of the carrying amount of each asset in the CGU.
The impairment loss is recognised in profit or loss immediately. An impairment loss for assets is reversed if,
and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since
the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised. Such reversals are recognised as income immediately in profit or loss.
4.7 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the weighted average formula. The cost of raw materials comprises all costs of
purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location
and condition. The cost of work-in-progress includes the cost of raw materials and a proportion of production
overheads. The cost of finished goods includes the cost of raw materials, direct labour, other direct cost and
a proportion of production overheads based on normal operating capacity of the production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and the estimated costs necessary to make the sale.
