Page 72 - Forterra

70 FORTERRA
ANNUAL REPORT 2012
NOTES TO THE
FINANCIAL STATEMENTS
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end
of each reporting period to determine whether there is objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a loss event
has occurred after the initial recognition of the asset, and that the loss event has a
negative effect on the estimated future cash flows of that asset that can be estimated
reliably.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a
specific asset and collective level. All individually significant loans and receivables are
assessed for specific impairment. All individually significant receivables found not to be
specifically impaired are then collectively assessed for any impairment that has been
incurred but not yet identified. Loans and receivables that are not individually significant
are collectively assessed for impairment by grouping together loans and receivables
with similar risk characteristics.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount and the present value of the
estimated future cash flows, discounted at the asset’s original effective interest rate.
Losses are recognised in profit or loss and reflected in an allowance account against
loans and receivables or held-to-maturity investment securities. Interest on the impaired
asset continues to be recognised. When a subsequent event (e.g. repayment by a
debtor) causes the amount of impairment loss to decrease, the decrease in impairment
loss is reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment
properties, are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated. An impairment loss is recognised if the carrying amount of an asset
or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its 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 using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or
CGU. For the purpose of impairment testing, assets that cannot be tested individually
are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or CGU.